# Community Reinvestment Act Regulations

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2021-27171

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** December 15, 2021
- **Citation:** 86 FR 71328

## Text

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 25
[Docket No. OCC-2021-0014]
RIN 1557-AF12
Community Reinvestment Act Regulations

AGENCY:

Office of the Comptroller of the Currency, Treasury.

ACTION:

Final rule.

SUMMARY:

The Comptroller of the Currency is adopting a final Community Reinvestment Act (CRA) rule that is based largely on the 1995 CRA rules, as revised, that were issued by the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC). This final rule applies to national banks and savings associations. This action rescinds the CRA final rule published by the OCC on June 5, 2020, and facilitates the OCC's planned future issuance of updated interagency CRA rules with the Board and FDIC.

DATES:

This final rule is effective on January 1, 2022. The compliance date for §§ 25.43 and 25.44 is April 1, 2022. The compliance date for the remainder of the rule is January 1, 2022.

FOR FURTHER INFORMATION CONTACT:

Emily Boyes, Counsel, Karen McSweeney, Special Counsel, Heidi Thomas, Special Counsel, or Kevin Behne, Senior Attorney, Chief Counsel's Office, (202) 649-5490; or Vonda Eanes, Director for CRA and Fair Lending Policy, or Karen Bellesi, Director for Community Development, Bank Supervision Policy, (202) 649-5470, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Background

Congress enacted the Community Reinvestment Act (CRA)
1

in 1977 to encourage insured depository institutions (IDI)
2

to help meet the credit needs of their entire communities, including low- and moderate-income (LMI) neighborhoods, consistent with the safe and sound operation of the IDIs.
3

Specifically, Congress found that “(1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business; (2) the convenience and needs of communities include the need for credit services as well as deposit services; and (3) regulated financial institutions have continuing and affirmative obligation[s] to help meet the credit needs of the local communities in which they are chartered.”
4

1
Public Law 95-128, 91 Stat. 1147 (1977) (codified at 12 U.S.C. 2901
et seq.
(as amended)).

2
The CRA uses the term “regulated financial institution,” which it defines to mean an “insured depository institution” as defined in 12 U.S.C. 1813(c)(2).
See
12 U.S.C. 2902(2).

3
12 U.S.C. 2903(a)(1). Congress enacted the CRA to promote access to credit by encouraging IDIs to serve their entire communities. During this period, Congress also enacted fair lending laws to address fairness and access to housing and credit. For example, in 1968, Congress passed a law that later became known as the Fair Housing Act to prohibit discrimination in renting or buying a home.
See
42 U.S.C. 3601
et seq.
(as amended). In 1974, Congress passed the Equal Credit Opportunity Act to prohibit creditors from discriminating against an applicant on the basis of race, color, religion, national origin, sex, marital status, or age.
See
15 U.S.C. 1691
et seq.
(as amended). These fair lending laws provide a legal basis for prohibiting discriminatory lending practices, such as redlining.
See
Interagency Fair Lending Examination Procedures, p. iv (Aug. 2009), available at
https://www.ffiec.gov/PDF/fairlend.pdf.

4
12 U.S.C. 2901(a).

The Office of the Comptroller of the Currency (OCC or Agency),
5

Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) (collectively, Agencies),
6

along with the Federal Home Loan Bank Board, first issued rules to implement the CRA in 1978.
7

The Agencies, along with the Office of Thrift Supervision (OTS), significantly revised and clarified the CRA rules in 1995 (1995 Rules).
8

On September 5, 2018, the OCC published an Advance Notice of Proposed Rulemaking (ANPR) as part of its renewed efforts to update the CRA regulatory framework.
9

On January 9, 2020, the OCC and FDIC published a joint CRA Notice of Proposed Rulemaking,
10

and on June 5, 2020, the OCC adopted the rule in final form (June 2020 Rule).
11

The June 2020 Rule applied to national banks, Federal savings associations, and State savings associations (collectively, banks).
12

5
The OCC is the primary regulator for national banks and Federal savings associations.

6
In addition to the Agencies, Congress also charged the Office of Thrift Supervision (OTS) and its predecessor agency, the Federal Home Loan Bank Board, with implementing the CRA. The OTS had CRA rulemaking and examination authority for all savings associations. The OTS's rulemaking authority for CRA transferred to the OCC in Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, 1522 (2010) (Dodd-Frank Act).
See also
12 U.S.C. 2905. With respect to CRA examination authority, the OCC examines Federal savings associations, and the FDIC examines State savings associations.
See
Sec. 312(b) of the Dodd-Frank Act.

7
43 FR 47144 (Oct. 12, 1978).

8
60 FR 22156 (May 4, 1995). As used herein, the term “1995 Rules” refers to the regulatory framework adopted by the Agencies and the OTS in 1995 and any revisions the Agencies and OTS made to that regulatory framework (
e.g.,
70 FR 44256 (Aug. 2, 2005) and 75 FR 61035 (Oct. 4, 2010)), except for the changes made by the OCC in the June 2020 Rule. The 1995 Rules were codified in 12 CFR parts 25, 563e (recodified as 195), 228, and 345.

9
The OCC worked with the Board and FDIC on this ANPR. 83 FR 45053.

10
85 FR 1204.

11
85 FR 34734.

12
As used herein, the term “bank” or “banks” also includes uninsured Federal branches that result from an acquisition described in section 5(a)(8) of the International Banking Act of 1978. 12 U.S.C. 3103(a)(8).

The June 2020 Rule took effect October 1, 2020, although several of its more material components had compliance dates of either January 1, 2023, or January 1, 2024.
13

To implement certain provisions of the June 2020 Rule with a compliance date of January 1, 2023, the OCC published a Notice of Proposed Rulemaking on December 4, 2020, (December 2020 NPR), which proposed an approach to determine the benchmarks, thresholds, and minimums in the June 2020 Rule's performance standards.
14

In connection with the December 2020 NPR, the OCC also published a CRA information collection survey (Information Collection)
15

to obtain the data necessary to calibrate the June 2020 Rule's performance standards.

13
12 CFR 25.01(c)(4).

14
85 FR 78258.

15
85 FR 81270 (Dec. 15, 2020).

On May 18, 2021, the OCC announced that it was reconsidering the June 2020 Rule.
16

At the same time, the OCC announced that it did not plan to finalize the December 2020 NPR and was discontinuing the Information Collection.
17

Collectively, these actions have enabled an orderly reconsideration of the June 2020 Rule and provided banks with the flexibility to deploy resources in response to the COVID-19 pandemic.

16

See
OCC Bulletin 2021-24, Community Reinvestment Act: Implementation of the June 2020 Final Rule, available at
https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-24.html.

17

Id.

Although the OCC issued the June 2020 Rule independently, the Agencies' joint CRA regulatory reform efforts have spanned the past decade.
18

In 2018, the

Agencies engaged with stakeholders, including civil rights organizations, community groups, members of Congress, academics, and IDIs, to obtain their perspectives and feedback on the CRA and potential improvements to the CRA regulatory framework. Separately, the Board explored ways to modernize the CRA regulatory framework to address changes in the banking industry, which culminated with the Board's publication of an ANPR on October 19, 2020 (Board ANPR).
19

18
For example, in 2014, pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the Agencies began a decennial review of all of their rules, with input from the public, to identify outdated, unnecessary, or unduly burdensome rules and to consider how to reduce regulatory burden on IDIs, while at the same time ensuring the safety and soundness of these institutions and the financial

system. Public Law 104-208, 110 Stat. 3009 (1996) (codified at 12 U.S.C. 3311). In 2017, the Agencies issued a report to Congress that included a summary of the public comments and recommendations received during the EGRPRA review, including those that addressed the CRA regulatory framework.
See
Federal Financial Institutions Examination Council, Joint Report to Congress. Economic Growth and Regulatory Paperwork Reduction Act, pp. 41-48 (Mar. 3, 2017), available at
https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.

19
85 FR 66410.

Throughout all of the Agencies' CRA modernization efforts, stakeholders have repeatedly stressed the importance of the Agencies issuing a single set of CRA rules applicable to all IDIs. On July 20, 2021, after considering (1) the disproportionate impacts of the pandemic on LMI communities, (2) the comments provided on the Board ANPR, and (3) the OCC's experience with implementation of the June 2020 Rule, the OCC announced it would propose to rescind the June 2020 Rule.
20

On the same day, the Agencies announced that they are working together to strengthen and modernize the rules implementing the CRA.
21

This final rule is an important step in this interagency process because it reestablishes generally uniform rules that apply to all IDIs. Thus, it better positions the Agencies to identify joint solutions to the common issues affecting IDIs and the communities they serve.

20
NR 2021-76, OCC Statement on Rescinding its 2020 Community Reinvestment Act Rule, available at
https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-76.html.

21
NR 2021-77, Interagency Statement on Community Reinvestment Act Joint Agency Action, available at
https://www.occ.gov/news-issuances/news-releases/2021/nr-ia-2021-77.html.

II. Proposed Rule

On September 8, 2021, the OCC issued its proposal to rescind the June 2020 Rule and replace it with rules for banks largely based on the 1995 Rules (Proposal or Proposed Rule).
22

The Proposal would have aligned the OCC's CRA rules with the Board's and FDIC's CRA rules, thereby reinstituting the regulatory uniformity for IDIs that existed prior to the June 2020 Rule and facilitating the ongoing interagency work to modernize the CRA rules. The OCC explained in the Proposal that any future interagency CRA rules would replace any final rule(s) the Agency issues pursuant to the Proposal.
23

22
NR 2021-94, OCC Issues Proposal to Rescind its 2020 Community Reinvestment Act Rule (Sept. 8, 2021), available at
https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-94.html. See also
86 FR 52026 (Sept. 17, 2021).

23
86 FR 52026, 52027.

The purpose of the Proposed Rule was to (1) create consistent and transparent CRA rules for banks; (2) limit CRA-related burden on banks, banks' communities, and examiners; and (3) ensure that the OCC continues to encourage banks to help meet the credit needs of their entire communities, including LMI neighborhoods, consistent with safe and sound operations. A description of the Proposal and the comments the OCC received is set forth below.

A. Overview

The Proposed Rule would have provided different performance tests and standards for banks of different sizes, structures, and operations. Specifically, the Proposed Rule would have provided an assessment method for (1) small banks that would be streamlined and would emphasize lending performance; (2) intermediate small banks (ISB) that would consider lending and community development (CD) activities (
i.e.,
loans, investments, and services); (3) large, retail banks that would focus on lending, investment, and service performance; and (4) wholesale and limited purpose banks that would be based on CD activities. The Proposed Rule also would have given any bank, regardless of its size or business strategy, the option for the appropriate Federal banking agency to evaluate it under a strategic plan.
24

24
As noted previously, the OCC has CRA examination authority for Federal savings associations, and the FDIC has CRA examination authority for State savings associations.
See supra
note 6. References in this final rule to “appropriate Federal banking agency” are intended to reflect this distinction.

Under the proposed performance tests and standards, the appropriate Federal banking agency would have considered a bank's performance context in assessing its CRA performance. Specifically, the Agency would have reviewed (1) demographic and economic data about the bank's assessment area(s) and information about its local economic conditions; (2) the bank's major business products and strategies; and (3) its financial condition, including its capacity and ability to lend or invest in its community. The Agency also would have reviewed any information a bank chose to provide about lending, investment, and service opportunities in its assessment area(s). Performance context also would have included any other information the appropriate Federal banking agency deemed relevant.

The Proposed Rule would have required a bank to identify one or more assessment area(s) where the appropriate Federal banking agency would evaluate its CRA performance. In most cases, the Proposed Rule would have required a bank to delineate as its assessment area(s) the town, city, county, or other political subdivision or a metropolitan statistical area (MSA) where (1) its main office, branch(es), and deposit-taking automated teller machines (ATMs) are located and (2) a substantial portion of its loans are made. A bank's assessment area(s) would not have needed to coincide with the boundaries of one or more political subdivisions or MSAs so long as the assessment area(s) was one that (1) the bank reasonably could have served; (2) satisfied applicable regulatory requirements; (3) did not reflect illegal discrimination; and (4) did not arbitrarily exclude LMI geographies (
i.e.,
census tracts).

Under the Proposed Rule, large banks
25

(and in some circumstances, other banks) would have needed to collect, maintain, and report certain data related to the proposed performance tests and standards. The OCC would have made this data available through individual and aggregate disclosure statements. In addition, banks would have made CRA-related information available in their public files and posted CRA notices in specified locations.

25
The term “large banks” is used in CRA guidance related to the 1995 Rules to describe banks that exceed the ISB asset-size threshold.

For a more detailed description of the 1995 Rules, on which the Proposed Rule was largely based, see the
Supplemental Information
sections of the
Federal Register
documents in which the 1995 Rules were issued.
26

26

See supra
note 8.

B. Summary of Key Provisions

The following is a summary of key provisions of the Proposed Rule.

1. Performance Tests and Standards.
27

27
The proposed performance tests and standards applicable to a bank would have been based on the bank's asset size. The proposed asset-size thresholds for determining whether a bank would be a large bank, ISB, or small bank under the Proposed Rule would have been adjusted annually and aligned with the current asset-size thresholds

in the Board's and FDIC's rules.
See
12 CFR parts 228 and 345.

○ Small bank
28

performance standards would have included a retail lending test for assessing CRA performance. The small bank lending test could also have included consideration of CD loans. Qualified investments and CD services could have been considered at the bank's option for an “outstanding” rating, but only if the bank met or exceeded the lending test criteria in the small bank performance standards.

28
Under the Proposed Rule, “small bank” means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.322 billion. “ISB” means a small bank with assets of at least $330 million as of December 31 of both of the prior two calendar years and less than $1.322 billion as of December 31 of either of the prior two calendar years.
See
12 CFR 25.12(u), of the Proposed Rule.

○ The ISB
29

performance standards would have included an assessment of CRA performance under the small bank retail lending test and a CD test. Under the ISB CD test, the appropriate Federal banking agency would have evaluated all CD activities together.

29

Id.

○ Large bank (
i.e.,
banks that exceed the ISB asset-size threshold)
30

lending and service tests would have considered both retail and CD activity, while the large bank investment test would have focused on qualified investments as defined in the Proposed Rule.

30

Id.

○ The appropriate Federal banking agency would have evaluated wholesale and limited purpose banks under a CD test that considered activities (1) within a bank's broader statewide or regional area(s) that includes a bank's assessment area(s) as activities that benefit the bank's assessment area(s) and (2) outside of the bank's broader statewide or regional area that includes a bank's assessment area(s) if the bank had been responsive to needs in its assessment area(s).

○ Any bank could have elected to be evaluated under a strategic plan that set out measurable goals for lending, investment, and services, as applicable, to achieve a “satisfactory” or “outstanding” rating. The bank would have developed its strategic plan with community input, and the appropriate Federal banking agency would have needed to approve the bank's plan.

2.
Discriminatory or Other Illegal Credit Practices (DOICP).
Under the Proposal, the appropriate Federal banking agency's evaluation of a bank's CRA performance would have been adversely affected by evidence of DOICPs, including violations of the Equal Credit Opportunity Act;
31

Fair Housing Act;
32

Homeownership and Equity Protection Act;
33

the prohibition against unfair or deceptive acts or practices in section 5 of the Federal Trade Commission Act;
34

section 8 of the Real Estate Settlement Procedures Act;
35

and the Truth in Lending Act.
36

The list of discriminatory or other illegal credit practices in the Proposal was not exhaustive, and the OCC also would have considered credit-related violations of the Military Lending Act (MLA) and Servicemembers Civil Relief Act (SCRA)
37

based on guidance that predates the June 2020 Rule.
38

31
15 U.S.C. 1691
et seq.

32
42 U.S.C. 3601
et seq.

33
Public Law 103-325, 108 Stat. 2190 (1994) (codified at 15 U.S.C. 1601-02; 15 U.S.C. 1639-41).

34
15 U.S.C. 45.

35
12 U.S.C. 2607.

36
15 U.S.C. 1601-1667f (as amended).

37

See
10 U.S.C. 987 and 50 U.S.C. 3901
et seq.,
respectively.

38

See
OCC PPM 5000-43, Impact of Evidence of Discriminatory or Other Illegal Credit Practices on Community Reinvestment Act Ratings (Aug. 15, 2018).

3.
Retail and CD Activities.
The appropriate Federal banking agency would have evaluated banks' CRA performance based on (1) retail lending (
i.e.,
home mortgage loans, small business loans, small farm loans, and consumer loans, as applicable) and CD loans; (2) qualified investments; and (3) CD services, as each of these terms would have been defined in the Proposed Rule and considered in the applicable performance tests and standards.

4.
Assessment Area(s).

○ A bank would have delineated assessment area(s) that generally—

Included the geographies where the bank has its main office, branch(es), and deposit-taking ATMs (as applicable), as well as any surrounding geographies where the bank has originated or purchased a substantial portion of its loans; and

Consisted of one or more MSAs, metropolitan divisions, or political subdivisions with a bank permitted to adjust the boundaries of its assessment area(s) to include only the portion of the political subdivision that the bank could reasonably be expected to serve.

○ Assessment area(s) would have been required to:

Consist of whole geographies;

Not reflect illegal discrimination;

Not arbitrarily exclude LMI geographies; and

Not extend substantially beyond an MSA or State boundary unless the bank's assessment area(s) was in a multistate MSA.

5.
Data Collection, Recordkeeping, and Reporting.

○ Banks, other than small banks, would have collected, maintained, and reported certain data related to small business loans, small farm loans, CD loans, and assessment areas. Banks, other than small banks, that are subject to the Home Mortgage Disclosure Act of 1975 (HMDA) reporting requirements
39

also would have reported certain information related to home mortgage lending outside of the MSA(s) where a bank has a home or branch office (or outside any MSA). The Proposed Rule also would have included certain optional data collection and reporting provisions.

39
12 U.S.C. 2801
et seq.

○ The Proposed Rule would have reinstated requirements regarding the content and location of the public file and public notices that were revised or eliminated in the June 2020 Rule.

6.
Ratings.
The appropriate Federal banking agency would have determined a bank's CRA rating as provided in proposed appendix A.

7.
Integration of National Bank and Savings Association Rules.
The Proposed Rule would have reinstated separate rules for national banks (at 12 CFR part 25, subparts A through E and appendices A and B) and savings associations (at 12 CFR part 195, subparts A through C and appendices A and B). The June 2020 Rule integrated these rules in 12 CFR part 25.

8.
Transition Period.
The Proposed Rule would have required banks to comply with the final rule as of the effective date with no option to follow any provisions in the June 2020 Rule during the period between when the OCC would adopt the Proposed Rule in final form and the Agencies would adopt updated interagency CRA rules in final form.
40

The Proposal discussed whether the OCC should address certain transition considerations in the final rule.

40
The period of time between the effective date of this final rule and the effective date of final updated interagency CRA rules is referred to herein as the “interim period.”

III. Comments on the Proposed Rule

The OCC received 62 comment letters on the Proposed Rule, the majority of which generally supported rescinding the June 2020 Rule and the ongoing interagency effort to issue updated CRA rules. These comments addressed a wide range of issues and came from a variety of stakeholders and interested parties, including the banking industry, community and other advocacy groups, State and local governments, and the general public. The discussion below

identifies the significant issues raised by these commenters and explains how the OCC addresses these issues in the final rule. This final rule will provide certainty to stakeholders, eliminate burden associated with continuing to transition to the June 2020 Rule, and better position the OCC to engage in an interagency rulemaking process to update and modernize the CRA rules.

Transition Provisions.
The OCC proposed to replace the June 2020 Rule with rules for banks based on the 1995 Rules. The Proposed Rule included a description of several transition considerations that the OCC was contemplating to provide for a smooth transition from the June 2020 Rule. Although commenters generally supported rescission of the June 2020 Rule, they expressed opposing views on replacing the June 2020 Rule with rules based on the 1995 Rules. Community groups and other commenters generally supported the Proposal for reasons including (1) the OCC should not have independently promulgated the June 2020 Rule; (2) there would be confusion and inconsistent CRA evaluations if there were different CRA regulatory regimes applicable to different types of IDIs; (3) the June 2020 Rule is not yet fully effective, which lessens the impact of its rescission; (4) uniformity of CRA rules for all IDIs during the interim period would facilitate the ongoing interagency rulemaking process; and (5) the June 2020 Rule both failed to ensure that banks meet their local communities' banking needs and disincentivized investment in LMI communities and communities of color. One commenter suggested that the final rule should return banks to the 1995 Rules but include certain innovations from the June 2020 Rule, including deposit-based assessment areas and the list of qualifying activities.

In contrast, industry and trade associations generally opposed transitioning back to the 1995 Rules. Some of these commenters stated that banks have already changed their CRA programs to comply with the June 2020 Rule and another transition would be burdensome. They requested that the OCC balance the benefits of interagency uniformity with the need to minimize the disruption—for both banks and their CRA reinvestment partners—that will result if the OCC adopts the Proposed Rule. Similarly, others asserted that implementing the Proposed Rule would be disruptive, wasteful, and confusing. They recommended that the OCC minimize the number of regulatory transitions, the burden, and the confusion that would result from multiple rule changes.
41

41
One commenter also expressed concern that reinstatement of the 1995 Rules could lead to regressive financial policies in low-income communities and suggested that the OCC consider lessons from the financial crisis and solicit feedback from the most affected communities.

Several of these commenters requested that, during the interim period, the OCC (1) retain the provisions of the June 2020 Rule with a compliance date of October 1, 2020, and (2) revert to the 1995 Rules only for provisions of the June 2020 Rule with a compliance date of January 1, 2023, or January 1, 2024. Several commenters also requested that the OCC provide banks with flexibility to continue to utilize aspects of the June 2020 Rule or the 1995 Rules during the interim period, including by (1) providing consideration for all activities that qualify under either the June 2020 Rule or the 1995 Rules and (2) allowing banks that were in the process of transitioning to the June 2020 Rule to retain the CRA programs they have in place as long as their programs comply with either the 1995 Rules or the June 2020 Rule.

After considering the comments on transition issues, the OCC is adopting the final rule largely without modification from the Proposed Rule and with a delayed compliance date for two provisions: All banks will need to comply with the rule by January 1, 2022, with the exception of the public file and public notice provisions (§§ 25.43 and 25.44 of the final rule). As discussed below, banks will need to comply with §§ 25.43 and 25.44 by April 1, 2022. Notwithstanding commenters' concerns regarding the burden for banks to transition back to a rule based on the 1995 Rules, it is the view of the OCC that this burden will be limited because the June 2020 Rule has only been partially implemented. Further, the alternatives suggested by the commenters would create confusion. For example, allowing banks the flexibility to elect to operate under either the June 2020 Rule or the 1995 Rules would create confusion for stakeholders regarding which regulatory framework applied during banks' CRA evaluations. It also would undermine the goal of a consistent set of rules for all IDIs and could delay the issuance of the Agencies' updated interagency CRA rule. For example, creating a hybrid regulatory framework that leverages aspects of both the June 2020 Rule and the 1995 Rules could increase the supervisory burden and draw OCC resources away from the interagency CRA rulemaking efforts.

By finalizing this rule with an effective date of January 1, 2022, and a compliance date of April 1, 2022, for §§ 25.43 and 25.44, all IDIs will be subject to the same general regulatory framework at the earliest reasonable date, which will facilitate the Agencies' issuance of updated interagency CRA rules. To address concerns regarding the burden associated with this decision, the OCC will afford banks the implementation flexibility permitted by the transition provisions of the final rule and the Interagency Questions and Answers Regarding Community Reinvestment (Q&As) for the 1995 Rules
42

and other CRA guidance, including the application of performance context. For example, in evaluating a bank's performance from October 1, 2020, through the interim period, the OCC will consider the impact that regulatory changes had on the bank's ability to engage in qualifying activities as part of its performance context. In addition, the final rule's delayed compliance date of April 1, 2022, for the public file and public notice provisions will ease burden associated with this final rule.

42
81 FR 48506 (July 25, 2016).

Qualifying Activities.
The Proposed Rule would have replaced the qualifying activities criteria in the June 2020 Rule with the 1995 Rules' home mortgage loan, small business loan, small farm loan, consumer loan, and CD definitions. The Proposed Rule also would have replaced the definitions related to the qualifying activities criteria in the June 2020 Rule with the applicable definitions under the 1995 Rules. The Proposed Rule would have eliminated June 2020 Rule definitions that did not exist in the 1995 Rules.

The Proposal also explained that banks would receive consideration in their CRA examinations for activities that met the qualifying activities criteria or definitions in effect at the time that the banks conducted the activities.
43

Under the final rule, as was also the case under the June 2020 Rule, a CRA activity may include a legally binding

commitment to lend or invest. A legally binding commitment will be considered to have been conducted on the date that the commitment is legally binding on the bank. This practice is consistent with the OCC's longstanding treatment under the 1995 Rules of legally binding commitments.
44

Therefore, under the final rule, a legally binding commitment to lend or invest will be considered under the CRA regulatory framework that was in effect at the time the commitment became legally binding on the bank.

43
For example, if a bank originated a loan or entered into a legally binding commitment to lend on December 20, 2021, to build a charter school in which 40 percent of the students received free or reduced price school lunch, that loan would receive consideration in a bank's CRA examination even if the CRA examination took place after the effective date of the final rule (January 1, 2022) because this activity is a qualifying activity under the June 2020 Rule.
See
June 2020 Rule, 12 CFR 25.04(c)(5)(i). However, if the bank made the same loan or entered into the same legally binding commitment to lend on January 20, 2022, that loan or commitment would not qualify under the CD definitions in the final rule, and, therefore, would not receive consideration in a future CRA examination.
See
12 CFR 25.12(g) and (h) of this final rule.

44

See
12 CFR 25.21-27 of this final rule.
See also
Q&A § __.23(e); Q&A § __.26(b)-4.

The OCC asked whether its proposal to consider activities based on whether they qualified at the time the bank (1) conducted the activities or (2) entered into a legally binding commitment to conduct the activities was a reasonable approach to address the proposed changes to the activities that would receive consideration in CRA examinations.

Many commenters supported the elimination of the June 2020 Rule's qualifying activities criteria in the final rule and returning to the definitions in the 1995 Rules.
45

Other commenters advocated retaining the June 2020 Rule's qualifying activities criteria, asserting that their elimination would negatively affect banks' communities. For example, one commenter asserted that the broader definition of qualifying activities in the June 2020 Rule provides an incentive for banks to engage in activities that benefit communities, including LMI and underserved persons, and that this result is consistent with the CRA's intent.
46

Another commenter suggested that retaining the June 2020 Rule's approach for qualifying activities would minimize disruptions in ongoing investment decisions. Other commenters supported retaining the current framework because of the burdens associated with changing regulatory regimes. One commenter suggested that the OCC give CRA consideration to any activity that qualifies under either the 1995 Rules or June 2020 Rule.

45
One commenter suggested that, if legally permissible, the OCC should retroactively discount the expanded activities under the June 2020 Rule, particularly if done in the normal course of business, and all expanded activities should be re-evaluated to assess whether they benefitted the intended beneficiaries of the CRA.

46
One of these commenters specifically objected to reinstating the 1995 Rules' CD services definition, asserting that there are many CRA volunteer services that provide tremendous benefits to banks' communities but do not focus on providing financial services to these communities.

Many commenters expressed support for the proposal to provide consideration for activities based on whether they qualified at the time the activities were conducted or subject to a legally binding commitment, with some commenters describing this approach as both reasonable and appropriate. One community group stated that it would be unfair to revoke consideration for activities that qualified at the time that the activities were conducted.

After considering the comments, the OCC is adopting the retail lending, CD, and related definitions as proposed and adopts the proposed treatment of consideration for activities under the CRA. This outcome ensures that, going forward, (1) banks will receive consideration for activities that the Agencies have collectively recognized help to meet community credit needs; (2) consistent rules will apply to all IDIs; (3) banks will receive credit for dollars that are already legally committed; and (4) the OCC is likely to be able to more effectively work with the Board and the FDIC to determine the types of activities that should receive consideration under an updated interagency CRA rule. The final rule includes a provision in subpart D that explains when activities qualify for CRA consideration in CRA examinations based on the rule in effect at the time that the activities were conducted.

Confirmation Process.
The June 2020 Rule included a confirmation process for qualifying activities that permits banks and other interested parties to request OCC confirmation that a loan, investment, or service is consistent with that rule's qualifying activities criteria prior to engaging in the activity. Under the Proposed Rule, the OCC would have removed the qualifying activities confirmation process from the rule and replaced it with OCC procedures that would be operationally similar to the June 2020 Rule's confirmation process, but the OCC would have adapted the substance to conform to the 1995 Rules. The OCC requested comment on this approach.

Both industry and community group commenters expressed support for retaining a confirmation process. One industry commenter noted that, regardless of whether the process is included in the final rule, retaining a confirmation process would be the least disruptive outcome for banks and interested parties. A community organization noted that any confirmation process should be equally accessible to community-based organizations and banks. Another community group stated that any OCC delay in issuing guidance on the final rule's confirmation process should not affect banks' responsibilities to comply with the rule as of its effective date.

Given the broad support for a confirmation process in general and the clarity provided by the June 2020 Rule's confirmation process, the OCC is adopting the proposed approach and will provide guidance on the scope and mechanics of this CD activity confirmation process.
47

47
As of January 1, 2022, confirmation letters issued under the June 2020 Rule for qualifying activities that a bank has not yet engaged in, or entered into a legally binding commitment for, would no longer serve as OCC confirmation that an activity qualifies for CRA consideration. Nonetheless, the activity may still receive CRA consideration if it meets the CD definitions and other requirements of the final rule.

Illustrative List.
The June 2020 Rule provided an illustrative list of examples of CRA qualifying activities. The OCC indicated in the Proposal that it would maintain this list on its website to help banks determine whether activities conducted while the June 2020 Rule was in effect are eligible for CRA consideration. While the OCC received few comments on this topic, all of those who commented supported the proposed approach of continuing to maintain the list of examples.
48

The OCC believes that it may be useful to banks and other interested parties to continue to have access to the June 2020 Rule's illustrative list; therefore, the OCC will continue to make the list available on the Agency's website. After January 1, 2022, banks that newly engage in the activities on the illustrative list will only receive CRA consideration if the activities also meet the retail or CD definitions in the final rule.

48
One commenter requested that the OCC preserve the four illustrative examples of qualifying activities that involve access to digital services as part of any amended guidance on CRA qualifying activities. These examples will remain on the illustrative list; however, new activities consistent with these examples that are conducted after January 1, 2022 will only receive consideration to the extent that they also are consistent with the retail or CD definitions in the final rule.

Bank Asset-Size Thresholds.
The June 2020 Rule increased the bank asset-size thresholds for determining small, intermediate, and general performance standards banks from the thresholds for determining small, ISB, and large banks under the 1995 Rules.
49

This increase

changed some banks' asset-size categories (
e.g.,
certain banks that were ISBs under the 1995 Rules are small banks under the 2020 Rule, and certain banks that were large banks under the 1995 Rules became intermediate banks under the June 2020 Rule). Under the Proposed Rule, the OCC would have reinstated the bank asset-size thresholds of the 1995 Rules.
50

For banks that would have transitioned from small banks to ISBs as a result of this, under the Proposal, the OCC would have considered this change in assessing the bank's performance context. Although the proposed reinstatement of bank asset-size thresholds would have applied as of January 1, 2022, the Proposal described a transition period for the new data collection, recordkeeping, and reporting requirements for intermediate banks that would return to being designated as large banks or newly become designated as large banks, which is addressed in more detail below.

49
Prior to the enactment of the June 2020 Rule, (1) small banks were banks with less than $326 million in assets; (2) ISBs were banks with assets between $326 million but less than $1.305 billion; and (3) large banks were banks with assets of $1.305 billion and above. Under the June 2020 Rule, (1) small banks are banks with assets up to $600 million; (2) intermediate banks are banks with assets of greater than $600 million and up to $2.5 billion; and (3) general performance banks (referred to as large banks under the 1995 Rules' framework) are banks with greater than $2.5 billion in assets. As proposed, (1) small banks would have been

banks of less than $330 million in assets; (2) ISBs would have been banks with assets between $330 million and less than $1.322 billion; and (3) large banks would have been banks with assets of $1.322 billion and above.

50
The bank asset-size thresholds in this final rule reflect the adjusted thresholds issued by the Board and FDIC on December 17, 2020, effective January 1, 2021.
See, e.g.,
FDIC PR 140-2020, Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions, available at
https://www.fdic.gov/news/press-releases/2020/pr20140.html.
The Agencies make annual adjustments to the bank asset-size thresholds based on the change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), not seasonally adjusted, for each 12-month period ending in November. The adjusted thresholds are typically available mid- to late-December and are effective January 1 of the following year. Once the Agencies determine the annual adjustment for calendar year 2022, the OCC will publicize the updated bank asset-size thresholds.

The OCC received several comments on the proposed changes to the bank asset-size thresholds. Generally, industry commenters did not support the proposed changes, noting that banks recently adjusted their CRA programs to satisfy the June 2020 Rule and that the Proposed Rule would require another set of adjustments and associated burden (
e.g.,
small banks that become ISBs would be subject to a CD test; intermediate banks that become large banks would be subject to separate lending, investment, and service tests and to new or reinstated data collection, recordkeeping, and reporting requirements).

Commenters also noted that reinstating the 1995 Rules' bank asset-size thresholds and then revising them again in a future interagency rulemaking would both be wasteful and burdensome, in part due to institutions' limited staff. One commenter also asserted that the asset-size thresholds under the 1995 Rules were too low, do not reflect the current banking industry, and should not be reinstated. Another commenter noted that the proposed asset-size thresholds are problematic because many banks now have inflated balance sheets due to government programs related to the COVID-19 pandemic.

Other commenters stated that an immediate effective date for the reinstated asset-size thresholds would require banks to quickly modify their current procedures and processes (
e.g.,
purchasing CRA software; educating specific lines of business about the new requirements; updating job aids; and implementing new requirements and testing processes). Several commenters suggested that banks that would have to comply with new standards or tests under a final rule (
e.g.,
the ISB performance standards or large bank lending, investment, and services tests) should be provided with additional time to comply. One commenter supported a transition period for banks that were below the 1995 Rules' large bank asset-size threshold prior to the June 2020 Rule's effective date but now exceed the proposed large bank asset-size threshold. This commenter suggested a one-year transition, a two-year transition, or retaining the June 2020 Rule's bank asset-size thresholds for the duration of the interim period.

Community groups and other commenters generally supported the Proposal to revert to the 1995 Rules' asset-size thresholds. These commenters suggested that it should not be overly burdensome for banks to transition back to their former bank types because many banks likely retained their reporting infrastructure and software programs.

After considering these comments, the OCC is adopting the Proposed Rule's bank asset-size thresholds without modification. Therefore, any shift by banks to a new bank type (
i.e.,
small bank, ISB, or large bank) will be based on the final rule's definitions and effective January 1, 2022. Reinstating the 1995 Rules' asset-size thresholds is one way that the final rule establishes a consistent rule applicable to all IDIs, which, as discussed elsewhere in this preamble, will likely facilitate the interagency CRA rulemaking process. The final rule's consideration of performance context should provide sufficient flexibility to address commenters' concerns about the burden associated with being evaluated under new tests and standards. For example, the OCC will consider a bank's need to change its CRA procedures and processes (
e.g.,
reallocating staff and other resources; initiating or increasing its CD activities; or purchasing new software) when evaluating the bank under the final rule's applicable performance tests and standards. Furthermore, as discussed below, the OCC will provide banks that will be large banks for the first time under the final rule with additional time to comply with the rule's data requirements.

Data Collection, Recordkeeping, and Reporting Requirements for Banks Transitioning from Intermediate Banks to Large Banks.
Under the June 2020 Rule, banks with assets between $1.305 billion and $2.5 billion changed bank type from large bank (their classification under the 1995 Rules) to intermediate bank. As a result, these banks were no longer subject to large bank data collection and recordkeeping requirements starting in 2021, and, under the June 2020 Rule, they would not have been subject to large bank data reporting requirements in 2022.

Under the Proposed Rule, the OCC would have (1) treated banks that exceeded the ISB asset-size threshold
51

as large banks and (2) applied the large bank data requirements to banks that were designated as intermediate banks under the June 2020 Rule beginning one year from the final rule's effective date (one-year proposed grace period).
52

This treatment is consistent with the OCC's general practice under the 1995 Rules.

51

See supra
note 28.

52
Under the June 2020 Rule, banks that exceeded the intermediate bank threshold remained subject to the 1995 Rules' data collection, recordkeeping, and reporting requirements, and, therefore, the Proposed Rule would not have imposed new requirements on these banks.

As discussed above, industry commenters generally objected to the proposed changes to the bank asset-size thresholds largely because of the burden associated with the data requirements for the banks subject to new data requirements (
e.g.,
purchasing new software to comply with the applicable data requirements). Several commenters recommended that the OCC retain the June 2020 Rule's bank asset-size thresholds for the interim period. Others requested additional transition time to comply with the Proposed Rule's data requirements, or flexibility from the OCC when assessing an affected bank's data integrity. For example, one commenter suggested that the OCC apply a “good faith” standard in evaluating CRA performance during the interim period, including by (1) not issuing a “Needs to Improve” rating based on inaccuracies or deficiencies in

an affected bank's data if the bank demonstrates its program was developed and administered in good faith and (2) giving the bank a reasonable period of time to correct inaccuracies or deficiencies prior to issuing the bank's final performance evaluation rating.

Conversely, community groups generally supported the immediate reinstatement of the 1995 Rules' large bank data requirements for all large banks as of the effective date of the final rule. One commenter noted that this data is critical for assessing whether the bank is meeting community needs, and there should be no delay in providing it to the public. The OCC also received a comment suggesting different treatment for those banks that were large banks prior to the June 2020 Rule (redesignated large banks) and those banks that would, under the Proposal, be large banks for the first time (newly designated large banks).
53

53
As of September 30, 2021, approximately 36 OCC-regulated redesignated large banks and 31 OCC-regulated newly designated large banks would exceed the ISB threshold of the final rule and, therefore, be considered large banks under the final rule.

Because redesignated large banks have prior experience with the data requirements in the 1995 Rules, it does not appear to be necessary to provide them with a grace period for compliance with the large bank data collection, recordkeeping, and reporting requirements. The OCC notes that, although the final rule requires redesignated large banks to report calendar year 2022 data by March 1, 2023—a period of 14 months from the final rule's effective date—it contains no specific date during 2022 by which redesignated large banks must actually commence the applicable data collection and recordkeeping. Therefore, a redesignated large bank does not need to have its data collection and recordkeeping systems in place by January 1, 2022, to be in compliance with the final rule.
54

54
The OCC is not requiring data reporting for calendar year 2021 for any redesignated or newly designated large banks. OCC guidance provided that intermediate banks under the June 2020 Rule that were formerly large banks under the 1995 Rules were exempt from data collection and recording requirements for calendar year 2021 and reporting requirements for calendar year 2022.
See
OCC Bulletin 2020-99, Community Reinvestment Act: Key Provisions of the June 2020 CRA Rule and Frequently Asked Questions (Nov. 9, 2020), available at
https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-99.html.
Therefore, although one commenter expressed an interest in having redesignated large banks report 2021 data, it would be unreasonable for banks expressly exempt from data collection and recordkeeping requirements in calendar year 2021 to be expected to report that data by March 1, 2022. This approach is consistent with the 1995 Rules, which did not require banks that were small banks or ISBs in the prior calendar year to report data.

In addition, the OCC intends to work with these redesignated large banks over the next year to ensure they are on track to report calendar year 2022 data by March 1, 2023, and to provide them with any necessary flexibility in terms of missing information or other limited error tolerances for calendar year 2022 data. However, the error tolerances afforded these banks will only last one year and the data collection, recordkeeping, and reporting systems and processes of redesignated large banks must be fully functional by January 1, 2023, including with respect to data integrity. This approach should provide a sufficient transition period to appropriately balance the need for CRA data from redesignated large banks under the final rule with the practical challenges these banks may encounter.

In contrast, the OCC has determined it is appropriate to apply the proposed grace period approach to newly designated large banks. These banks do not have the same prior experience with the data collection, recordkeeping, and reporting requirements under the 1995 Rules, and it is reasonable to provide them with additional time to establish the systems and processes necessary to comply with the final rule's data requirements. Therefore, the OCC is providing these banks with a one-year grace period during which they will not be subject to the final rule's data requirements. Specifically, the OCC will require these banks to comply with the large bank data collection and recordkeeping requirements beginning on January 1, 2023, and report calendar year 2023 data consistent with the large bank reporting requirements by March 1, 2024. Additionally, the OCC will evaluate these banks under the final rule's ISB lending and CD tests until they report the data necessary to evaluate them under the rule's large bank lending, investment, and service tests.

Affiliate Activities.
The June 2020 Rule does not specifically address how the CRA activities of bank affiliates are treated but states that only activities conducted by a bank qualify for CRA consideration. In January 2021, the OCC issued an interpretive letter that limited the consideration of affiliate activities (IL 1177).
55

Under the Proposed Rule, the OCC would have considered a bank's affiliate's CRA activities consistent with the affiliate treatment provisions in the 1995 Rules, which permitted banks to elect to include affiliate activities in their CRA evaluations, subject to certain limitations.
56

As explained in the Proposal, the OCC also would have rescinded IL 1177.

55
The policy announced in that interpretive letter was set to take effect April 1, 2022, and provided that a bank would not have received CRA consideration for affiliate activities (including activities conducted by the nonbank parent and sister companies of the bank) unless the bank could demonstrate that it provided financing for or otherwise supported the qualifying activities of the affiliates.
See
IL 1177, OCC Senior Deputy Comptroller and Chief Counsel's Interpretation: Community Reinvestment Act Qualifying (CRA) Activities Conducted by a National Bank's or Savings Association's Subsidiaries and Affiliates, Including Nonbank Parent and Sister Companies of a National Bank or Savings Association Under Certain Circumstances, Can Receive CRA Credit Under the June 2020 CRA Final Rule (Jan. 4, 2021), available at
https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1177.pdf.

56

See
§§ 25.22(c), 25.23(c), 25.24(c), 25.25(d), and 25.27(c)(3) of the Proposed Rule.
See also
Q&A § __.22(c)(2)(i)-1; Q&A § __.22(c)(2)(ii)-1; Q&A § __.22(c)(2)(ii)-2; Q&A § __.24(e)-1; and Q&A § __.26-1.

Commenters that addressed affiliate activities generally supported the OCC's proposed treatment of these activities, and the OCC adopts the Proposed Rule as final on this issue. This decision should be generally nondisruptive relative to the alternatives because it (1) enables banks to retain their existing business models for engaging in CRA activities; (2) ensures that banks receive consideration for CRA-qualifying activities; and (3) promotes banks' continued efforts to serve their communities. Consequently, as of January 1, 2022, this final rule supersedes IL 1177, and banks may receive consideration for affiliate activities as provided for in the final rule.
57

57
Consistent with this statement, the OCC will officially rescind IL 1177 as of January 1, 2022.

Strategic Plans.
As explained in the Proposal, the June 2020 Rule revised the requirements for strategic plans by, among other things, permitting banks to include target market assessment areas in their strategic plans. The OCC proposed to allow banks to maintain strategic plans that the Agency had approved under the June 2020 Rule, including plans that contained target market assessment areas.
58

Although not addressed in the Proposal, the OCC

had provided in guidance regarding the June 2020 Rule that banks could establish goals for CRA-qualifying activities conducted outside of their assessment areas.
59

58
The OCC stated in the Proposal that permitting strategic plan banks to maintain their target market assessment areas was not inconsistent with proposed 12 CFR 25.41 and would cause the least disruption during the transition from the OCC's June 2020 Rule to any future interagency final rules. The OCC notes that there are currently no banks with strategic plans, or strategic plans pending OCC approval by December 31, 2021, that include goals established for target market assessment areas. As a result, the remaining discussion of strategic plan transition issues focuses on issues other than target market assessment areas.

59
Pursuant to OCC Bulletin 2020-99, a bank operating under an approved strategic plan could receive consideration for qualifying activities conducted outside of its assessment area(s) by establishing a separate goal for those activities. The OCC would judge the goal for outside qualifying activities independently of the goals established for delineated assessment area(s). These outside activities could elevate bank performance from satisfactory to outstanding but could not compensate for less than satisfactory overall performance inside a bank's assessment area(s). Poor performance in one area could not be offset by performance that exceeds plan goals in another area.

Several commenters supported maintaining strategic plans approved under the June 2020 Rule with one commenter generally advocating for maintaining the status quo for portions of the June 2020 Rule. One commenter supported maintaining these plans but only if the strategic plan period is already in effect. A few commenters expressed concern about how these strategic plans would be affected if the final rule rescinds the June 2020 Rule's qualifying activities criteria, with some recommending that affected banks be permitted to continue to rely on those criteria while the plan is in effect.
60

In contrast, a community group commenter suggested that the OCC work with banks to modify strategic plans including target market assessment areas. The commenter noted that although this would put additional burden on the OCC and banks, it would not be unreasonable considering the circumstances and that it is not wholly sensible that banks would utilize strategic plans based on a rule that no longer applies.

60
The challenges associated with meeting strategic plan goals was one reason commenters requested that, during the interim period, the OCC retain either (1) the provisions of the June 2020 Rule with an October 1, 2020, compliance date or (2) the qualifying activities criteria and related definitions.

Under the final rule, strategic plans approved under the June 2020 Rule may remain in effect but these plans must comply with the provisions of the final rule, as applicable.
61

This application of the final rule to strategic plans would put all banks—those with strategic plans and those without—on a level playing field. Because banks will be subject to the applicable aspects of the final rule, the guidance that permitted banks to develop outside of assessment areas goals is no longer applicable.
62

Specifically, for strategic plans, the final rule provides that the OCC will consider a bank's record of helping to meet the credit needs of its assessment area(s). Therefore, provisions in strategic plans that include goals for activities outside a bank's assessment area(s) will no longer be applicable, and the OCC will no longer evaluate these activities when assessing the bank's performance. Because the final rule does not address assessing performance outside of a bank's assessment area(s), the OCC will not rate a bank “Needs to Improve” or “Substantial Noncompliance” solely for failure to meet goals established under the June 2020 Rule for any area(s) outside of its assessment area(s).

61
Approved strategic plans will remain in effect for the duration of the term set out in the plan, unless otherwise amended.

62

See supra
note 59.

In addition, the OCC is committed to minimizing burden on banks transitioning to the final rule by giving them the appropriate flexibility permitted under the final rule, Q&As and other CRA guidance, and longstanding OCC policy in evaluating their performance relative to the goals outlined in strategic plans approved under the June 2020 Rule. Therefore, the OCC will continue to consider a bank's activities in the broader statewide or regional area(s) that include a bank's assessment area(s), consistent with the guidance in the Q&As.
63

63
Q&A § __.12(h)-6.

Nonetheless, if a bank is concerned that it will not be able to meet the measurable goals specified in its strategic plan due to the regulatory changes in the final rule, the bank may request to amend its strategic plan based on the process outlined in § 25.27(h) of the final rule. While the OCC will not require any bank to amend its strategic plan, the OCC will work expeditiously with banks that request amendments. This approach will enable the OCC to balance its interest in reestablishing consistency with respect to the CRA rules with banks' individual circumstances.

CRA Activities Outside of a Bank's Assessment Area(s).
The June 2020 Rule provides for nationwide consideration of qualifying activities for banks evaluated under the general performance standards. As explained in guidance addressing implementation of the June 2020 Rule, if certain conditions are met during the period transitioning from the 1995 Rules to the June 2020 Rule, an OCC-regulated bank could receive consideration for qualifying activities conducted outside of its assessment area(s), even if those activities do not directly or indirectly serve its assessment area(s).
64

64

See
OCC Bulletin 2020-99.

Under the Proposed Rule, the OCC would have considered a bank's activities outside of its assessment area(s) in limited circumstances and generally not on a nationwide basis, consistent with the 1995 Rules and the Q&As. The OCC requested comment, however, on whether it should continue to consider bank activities that do not directly or indirectly serve either a bank's assessment area(s) or the broader statewide or regional area(s) that include the bank's assessment area(s). For commenters who supported consideration for those activities, the OCC also requested comment on what conditions, if any, should apply.

Several community group commenters supported limiting consideration for activities that do not directly or indirectly serve either a bank's assessment area(s) or the broader statewide or regional area(s) that include a bank's assessment area(s). The commenters noted that the Agencies should have the same rules and apply the same standards to activities conducted outside of the assessment areas of the IDIs they supervise. One community group commenter also stated that consideration of these activities should end on the effective date of the final rule. In contrast, some industry commenters asserted that the OCC should continue to consider activities conducted outside of banks' assessment areas.

The final rule does not provide for consideration of activities that do not directly or indirectly serve either a bank's assessment area(s) or the broader statewide or regional area(s) that include a bank's assessment area(s). This approach is more consistent with the approach taken by the 1995 Rules and likely will enable the OCC to work more effectively with the Board and the FDIC in the interagency rulemaking process on a consistent approach for the geographic consideration of CD activities.
65

65
Under the final rule, banks may receive consideration for investments in nationwide funds consistent with the guidance in Q&A § __.23(a)-2.

Public File.
The June 2020 Rule included requirements for the content and location of a bank's public file that differed from those in the 1995 Rules. The Proposed Rule would have restored the public file content and location requirements in the 1995 Rules. As such, the Proposed Rule would have required banks to (1) include additional information in their public files; (2) make all the information in their public file available at their main offices and, if an interstate bank, at one branch office in each State; and (3) make more limited information available at each

branch. Because the Proposed Rule would have imposed these additional public file content and location requirements, the OCC requested comment on whether banks would need additional time to comply and, if so, whether three months after the final rule's effective date would be sufficient time.

Some industry commenters suggested that, under the final rule, banks should be given the flexibility to comply with the public file requirements of either the 1995 Rules or June 2020 Rule. They argued that this flexibility would reduce the burden for banks that very recently transitioned to the June 2020 Rule's public file requirements. One industry commenter suggested that banks should have four months to comply if the rules are finalized as proposed. In contrast, other commenters suggested that three months was sufficient for banks to make these changes, with some noting that the proposed approach was to revert to a well understood and established process.

The final rule adopts the three-month transition provision for compliance with the final rule's public file requirements as proposed. Therefore, banks will be required to comply with the final rule's public file requirements by April 1, 2022. This transition period should strike an appropriate balance between providing community groups and other interested parties with access to the information that banks will have to provide in their public files under the final rule and ensuring that banks have adequate time to update their public files in accordance with the requirements of the final rule.

Public Notice.
The June 2020 Rule's public notice requirements differed from the 1995 Rules' requirements. Under the Proposed Rule, the 1995 Rules' public notice content and location requirements would have been restored, requiring each bank to provide the public notice content set out in appendix B of the Proposed Rule and place the notice in (1) the public lobby of its main office and (2) each branch, if any. Although the Proposed Rule would not have provided a transition period for complying with this provision, the OCC requested comment on this issue.

Some industry commenters suggested that the OCC should permit banks to comply with the public notice requirements under either the 1995 Rules or June 2020 Rule because it would be burdensome for banks that already transitioned to the June 2020 Rule's public notice requirement. One commenter requested four months for banks to make necessary changes, to the extent the OCC does not permit banks to use either the June 2020 Rule's or 1995 Rules' requirements as requested. In contrast, one commenter opposed any transition period.

The OCC agrees that it would be unduly burdensome to require banks to comply with the public notice requirements as of the January 1, 2022, effective date. Therefore, banks will be required to comply with the public notice requirements three months after the effective date of the final rule, April 1, 2022. The three-month delayed compliance date for the final rule's public notice provisions will mitigate burden associated with the revised content and location requirements while ensuring that interested parties are appropriately provided with the requisite notice.

DOICP.
Prior to issuing the June 2020 Rule, OCC policy provided that the Agency would consider a bank's violation of the MLA or SCRA in its CRA examination of that bank.
66

The June 2020 Rule codified this policy by including MLA and SCRA violations in the non-exhaustive, enumerated list of DOICPs included in the rule that the OCC considers in evaluating a bank's CRA performance.

66

See supra
note 38.

Under the Proposed Rule, the codification of this policy would be rescinded. The OCC did not intend, however, for this change to have a substantive effect. Because the list of violations included in the Proposed Rule is non-exhaustive, the OCC would have continued to consider violations of the MLA and SCRA consistent with its longstanding policy.
67

67

Id.

The OCC received only one comment on this issue that opposed the change. This commenter stated that MLA and SCRA are designed to create a national standard of conduct and CRA evaluations should assess banks' compliance with these laws. As noted above, the OCC would have continued to consider MLA and SCRA violations under the Proposed Rule. Because one of the OCC's primary goals in issuing the Proposed Rule was to re-establish consistent rules for all IDIs, and because it is not necessary to include MLA and SCRA violations in the rule for the appropriate Federal banking agency to consider them in CRA examinations, the OCC adopts the Proposed Rule as final on this issue.

Publication of CRA Performance Evaluations.
One community group commenter suggested that the OCC should instruct banks to make CRA exams more prominent on their websites and that all applications for new charters or for a change in control include publicly released CRA plans available from the banks and the regulatory agencies. The OCC has elected not to make this change at this time given the interest in reestablishing consistent requirements for all IDIs.

Integration of National Bank and Savings Association Rules.
Under the June 2020 Rule, there is currently a single CRA rule that applies to both national banks and savings associations, located at 12 CFR part 25. The Proposed Rule would have reverted back to separate CRA rules for national banks and savings associations, 12 CFR part 25 and 12 CFR part 195, respectively, as was the case under the 1995 Rules. These separate rules, originally issued on an interagency basis, are materially the same, with only a few differences, described below.

The OCC sought input from commenters on whether it should retain the integrated rule or reinstate separate rules. Commenters did not provide significant input on this issue. One industry commenter opposed integration if it would prevent or deter the Agency from implementing a final rule that would allow OCC-regulated banks to continue to operate under the June 2020 Rule, and a member of the public expressed general support for separate rules. The OCC notes that integrating the national bank and savings association CRA rules will not affect the timing of the final rule's implementation.

As a general matter, the OCC has integrated many of its national bank and savings association rules for a variety of reasons, including to reduce regulatory duplication and clarify when the same substantive rule applies to both types of entities.
68

For these same reasons, the final rule maintains the integration of the national bank and savings association CRA rules in a single CRA rule. Furthermore, keeping an integrated rule will cause less confusion for stakeholders. The OCC also notes that integrating the CRA rules in this final rule will simplify the process of amending the OCC's CRA rule during the interagency rulemaking process and negate the need for OCC-specific integration provisions in the updated interagency rulemaking. Therefore, the OCC is not adopting the proposed separate rules for national banks and savings associations but is instead adopting an integrated CRA rule. Specifically, the final rule sets out, in 12

CFR part 25, subparts A through E
69

and appendices A and B, the CRA rule applicable to both national banks and savings associations. This integration should not have a material impact on any bank or any other person or entity.

68

See, e.g.,
79 FR 28393 (May 16, 2014); 80 FR 43240 (July 21, 2015).

69
Subpart E, Prohibition Against Use of Interstate Branches Primarily for Deposit Production, only applies to national banks.

Parts 25 and 195 under the 1995 Rules contained two substantive differences that were retained in the Proposed Rule. First, the Proposed Rule contained a small difference with respect to the effect of a national bank's CRA performance on an application for a deposit facility compared to a savings association's application. Under the CRA statute, the Agencies must take into account an institution's CRA performance record when evaluating an “application for a deposit facility.”
70

The statute defines an “application for a deposit facility” to include the “establishment of a domestic branch or other facility with the ability to accept deposits.”
71

Consistent with the 1995 Rules, proposed § 25.29(a)(1) stated that the OCC would take into account an applicant bank's CRA performance record in considering an application to establish a “domestic branch,” while proposed § 195.29(a)(1) would have permitted the appropriate Federal banking agency to consider this record in a savings association's application to establish a “domestic branch or other facility that would be authorized to take deposits.” Second, proposed § 25.29(b) would have required an application for a national bank charter filed by an applicant other than an IDI to include a description of the how the applicant will meet its CRA objectives and the OCC to take into account this description in considering the application. The Proposed Rule did not include a similar requirement for an IDI applicant for a national bank charter. The Proposed Rule for savings associations, § 195.29(b), differed from the Proposed Rule for national banks by including this requirement for every applicant for a savings association charter, not just non-IDI applicants. The OCC is including in the final rule separate provisions to reflect these differences for national banks and savings associations.

70
12 U.S.C. 2903(a)(2).

71
12 U.S.C. 2902(3).

The final rule also includes a number of non-substantive or technical changes to proposed part 25 and its appendices to reflect the integration of the national bank and savings association rules. For example, § 25.11(c)(1)(ii) of the final rule explains that the OCC has the authority to prescribe these rules for national banks, Federal savings associations, and State savings associations and to enforce these rules for national banks and Federal savings associations. It further explains that the FDIC has the authority to enforce these rules for State savings associations. Section 25.11(c)(1)(iii) of the final rule explains that the phrase “appropriate Federal banking agency” will mean the OCC when the institution is a national bank or Federal savings association and the FDIC when the institution is a State savings association. This allows a single rule to apply to different institutions.

The final rule also revises the proposed definition of “bank” in § 25.12(e) to include a definition of “banks or savings associations” and a definition of “banks and savings associations.” Revising the proposed definition of the term “bank,” as opposed to adding a separate definition for “savings associations,” preserves in the final rule the numbering convention that is used in the Q&As. However, because “bank” and “savings association” are not separately defined, the final rule also revises §§ 25.29 and 25.44 to use the terms “insured national bank” and “savings association” in the parts of those section that apply to only one type of institution. Lastly, the final rule does not include proposed 12 CFR part 195.

Interagency Rulemaking.
The OCC received a number of comments on the June 2020 Rule and recommendations and ideas for the Agencies' efforts to develop updated interagency CRA rules. Such comments are outside the scope of the current rulemaking. The OCC will share these comments with the Board and FDIC, as they are more relevant to the interagency rulemaking process.

Technical Changes.
The OCC proposed a technical correction to an error in the 1995 Rules' cross-reference to the definition of “foreign bank” at 12 CFR 25.62(a)(2) by replacing “12 CFR 28.11(j)” with “12 CFR 28.11(i).” The Agency received no comments on this change and adopts the correction as proposed.

The final rule also includes three other technical corrections. First, the final rule corrects the 1995 Rules' cross-reference to the definition of “Federal branch” in 12 CFR 25.62(c) by replacing “12 CFR 28.11(i)” with “12 CFR 28.11(h).” Second, the final rule corrects the 1995 Rules' cross-reference to the definition of the “home State of the foreign bank” in 12 CFR 25.62(d)(4)(i) by replacing “12 CFR 28.11(o)” with “12 CFR 28.11(n).” Third, in appendix B, the final rule replaces (1) the reference to “Comptroller of the Currency” with “Office of the Comptroller of the Currency (OCC)” and (2) references to the “Comptroller” and “Deputy Comptroller” with “OCC.”

IV. The Final Rule

For the reasons discussed above, the OCC finalizes the rule as proposed, except as discussed above.
72

72
As referenced throughout this preamble, the final rule incorporates the guidance in the Q&As and any other applicable guidance related to the 1995 Rules.

V. Regulatory Analyses

A. Paperwork Reduction Act

Certain provisions of the final rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995.
73

In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The OCC submitted the information collection requirements to OMB in connection with the Proposed Rule and received pre-approval under OMB Control No. 1557-0160.

73
44 U.S.C. 3501
et seq.

Under the final rule:

• 12 CFR 25.25(b)—Requests for designation as a wholesale or limited-purpose bank shall be made in writing with the OCC at least three months prior to the proposed effective date of the designation.

• 12 CFR 25.27—Strategic plans shall be submitted at least three months prior to proposed effective dates. Plans shall include measurable goals and address all the performance categories. Plans shall include a description of informal efforts to solicit public suggestions, any written public comments received, and if revised pursuant to public comment, a copy of the initial plan. Amendments to plans shall be submitted in the case of a change in material circumstances.

• 12 CFR 25.42(a)—Large banks shall collect and maintain certain small business and small farm loan data in a machine-readable form and report it annually pursuant to 12 CFR 25.42(b)(1).

• 12 CFR 25.42(b)(2)—Large banks shall report annually in machine readable form the aggregate number and aggregate amount of community development loans originated or purchased.

• 12 CFR 25.42(b)(3)—A large bank, if subject to reporting under HMDA, shall report the location of each home mortgage loan application, origination,

or purchase outside the MSAs where the bank has a home or branch office.

• 12 CFR 25.42(c)(1)—Each bank shall collect and maintain in machine readable form certain data for consumer loans originated or purchased by the bank for consideration under the lending test. Under 12 CFR 25.42(c)(2)-(4), other information shall be included concerning a bank's lending performance, including additional loan distribution data.

• 12 CFR 25.42(d)—A bank that elects to have the OCC consider loans by an affiliate, for purposes of the lending or community development test or an approved strategic plan, shall collect, maintain, and report the data that the bank would have collected, maintained, and reported pursuant to 12 CFR 25.42(a)-(c), had the loans been originated or purchased by the bank. For home mortgage loans, the bank shall also be prepared to identify the home mortgage loans reported under HMDA by the affiliate.

• 12 CFR 25.42(e)—A bank that elects to have the OCC consider community development loans by a consortium or a third party, for purposes of the lending or community development tests or an approved strategic plan, shall report for those loans the data that the bank would have reported under 12 CFR 25.42(b)(2), had the loans been originated or purchased by the bank.

• 12 CFR 25.42(f)—Small banks that qualify for evaluation under the small bank performance standards but elect evaluation under the lending, investment, and service tests shall collect, maintain, and report the data required for other banks under 12 CFR 25.42(a) and 25.42(b).

• 12 CFR 25.42(g)—A bank, except a bank that was a small bank during the prior calendar year, shall collect and report to the OCC by March 1 of each year a list for each assessment area showing the geographies within the area.

• 12 CFR 25.43(a)—A bank shall maintain a public file that contains certain specified details: All written comments and responses; a copy of the public section of the bank's most recent CRA performance evaluation; a list of the bank's branches; a list of the branches opened or closed; a list of services offered; and a map of each assessment area delineated by the bank.

• 12 CFR 25.43(b)—A large bank shall include in its public files certain information pertaining to the institution and its affiliates, if applicable, for each of the prior two calendar years. If the bank has elected to have one or more categories of its consumer loans considered under the lending test, for each of these categories, it shall include the number and amount of loans: To low-, moderate-, middle-, and upper-income individuals; located in low-, moderate-, middle-, and upper-income census tracts; and located inside and outside the bank's assessment area(s); and its CRA Disclosure Statement. A bank required to report home mortgage loan data pursuant to 12 CFR part 1003 shall include a written notice that the institution's HMDA Disclosure Statement may be obtained on the Consumer Financial Protection Bureau's (Bureau's) website. A bank that elected to have the OCC consider the mortgage lending of an affiliate shall include the name of the affiliate and a written notice that the affiliate's HMDA Disclosure Statement may be obtained at the Bureau's website. A small bank or a bank that was a small bank during the prior calendar year shall include: Its loan-to-deposit ratio for each quarter of the prior calendar year and, at its option, additional data on its loan-to-deposit ratio; and the information required for other banks by 12 CFR 24.43(b)(1), if it has elected to be evaluated under the lending, investment, and service tests. A bank that has been approved to be assessed under a strategic plan shall include in its public file a copy of that plan. A bank that received a less than “Satisfactory” rating during its most recent examination shall include in its public file a description of its current efforts to improve its performance in helping to meet the credit needs of its entire community. The bank shall update the description quarterly.

• 12 CFR 25.43(c)-(e)—A bank shall make available to the public for inspection upon request and at no cost to the public the information required in these provisions at the main office or branch as specified. Upon request, a bank shall provide copies, either on paper or in another form acceptable to the person making the request, of the information in its public file. A bank shall ensure that this information is current as of April 1 of each year.

OCC Title of Information Collection:
Community Reinvestment Act.

Frequency:
On Occasion.

Affected Public:
Businesses or other for-profit.

Total estimated annual burden:
113,351 hours.

Comments continue to be invited on:

a. Whether the collections of information are necessary for the proper performance of the OCC's functions, including whether the information has practical utility;

b. The accuracy or the estimate of the burden of the information collections, including the validity of the methodology and assumptions used;

c. Ways to enhance the quality, utility, and clarity of the information to be collected;

d. Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA)
74

requires an agency, in connection with a final rule, to prepare a Final Regulatory Flexibility Analysis describing the impact of the rule on small entities (defined by the Small Business Administration for purposes of the RFA to include commercial banks and savings institutions with total assets of $600 million or less and trust companies with total assets of $41.5 million or less) or to certify that the rule will not have a significant economic impact on a substantial number of small entities. The RFA does not required this analysis, however, if the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short explanatory statement in the
Federal Register
, along with its rule.

74
5 U.S.C. 601
et seq.

The final rule will impact approximately 669 small entities. The OCC estimates the annual cost for small entities to comply with the final rule will be approximately $1,824 per bank ($114 per hour × 16 hours). In general, the OCC classifies the economic impact on an individual small entity as significant if the total estimated impact in one year is greater than 5 percent of the small entity's total annual salaries and benefits or greater than 2.5 percent of the small entity's total non-interest expense. Based on these thresholds, the OCC estimates that, if implemented, the final rule will have a significant economic impact on zero small entities, which is not a substantial number. Therefore, the OCC certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

C. Unfunded Mandates Reform Act of 1995

Pursuant to the Unfunded Mandates Reform Act of 1995,
75

the OCC considers whether a final rule includes

a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted for inflation). The OCC estimates that expenditures associated with the mandates in the final rule will be roughly $6.2 million and, therefore, concludes the rule will not result in an expenditure of $100 million or more annually (adjusted for inflation) by State, local, and tribal governments, or by the private sector.

75
2 U.S.C. 1532.

D. Administrative Procedure Act

Pursuant to section 553(b)(3)(B) of the Administrative Procedure Act (APA),
76

general notice and the opportunity for public comment are not required with respect to a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”
77

As described in the final rule's
SUPPLEMENTARY INFORMATION
section, the final rule includes a few technical amendments that the OCC did not include in its Proposed Rule. Because these amendments are not substantive and merely correct cross-references and a reference to the OCC, the OCC believes that public notice of these changes is unnecessary and, therefore, that it has good cause to adopt these changes without notice and comment.

76
5 U.S.C. 551
et seq.

77
5 U.S.C. 553(b)(3)(B).

Under the APA, an agency is required to provide a 30-day delayed effective date when publishing a substantive rule, with certain exceptions including for good cause.
78

The OCC believes it has good cause to issue this final rule without a 30-day delayed effective date for several reasons.

78
5 U.S.C. 553(d).

First, the OCC's CRA evaluations for banks consider CRA activities in full calendar year increments (
i.e.,
January 1-December 31). A 30-day delayed effective date would cause the final rule to take effect after the start of the 2022 calendar year. This would cause a bank to be subject to two different regulatory regimes during any three-year examination period that includes 2022, including different approaches to the activities that receive consideration in CRA evaluations and different data collection, recordkeeping, and reporting requirements. As was the OCC's experience with the June 2020 Rule, this would result in more complicated written CRA performance evaluations, create confusion for banks and other stakeholders reviewing CRA performance evaluations, and make it more difficult to compare CRA performance across the banking industry.
79

Second, data collected on a calendar-year basis is more useful to stakeholders than data collected for a partial year. Finally, banks currently are required to comply with many of the provisions in the 1995 Rules, which this final rule reinstates, because the June 2020 Rule is only partially in effect. Therefore, banks will not have to make changes to adjust to these provisions of the final rule.

79
The June 2020 Rule had an effective date of October 1, 2020, which resulted in two regulatory regimes applying during calendar year 2020.

For these reasons, the OCC finds that there is good cause to publish this rule without a 30-day delayed effective date.

E. Riegle Community Development and Regulatory Improvement Act of 1994

Under the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA), in determining the effective date and administrative compliance requirements for new rules that impose additional reporting, disclosure, or other requirements on IDIs, the OCC must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such rules will place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such rules.
80

In addition, the RCDRIA requires new rules and amendments to rules that impose additional reporting, disclosure, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the rules are published in final form.
81

The OCC has determined that this final rule will impose additional reporting, disclosure, or other new requirements on IDIs and considered the rule's burdens and benefits in determining its effective date and the administrative compliance requirements. The final rule's effective date provisions are consistent with the requirements of the RCDRIA.

80
12 U.S.C. 4802(a).

81
12 U.S.C. 4802(b).

F. Congressional Review Act

The Congressional Review Act provides that if the OMB makes a determination that a final rule constitutes a “major rule,” the rule may not take effect until at least 60 days following its publication.
82

The Congressional Review Act defines “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in—(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign based enterprises in domestic and export markets.
83

The OCC has submitted the final rule to the OMB for this major rule determination. As required by the Congressional Review Act, the OCC will also submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.
84

82
5 U.S.C. 801.

83
5 U.S.C. 804(2).

84
5 U.S.C. 801.

List of Subjects in 12 CFR Part 25

Community development, Credit, Investments, National banks, Reporting and recordkeeping requirements, Savings associations.

Authority and Issuance

For the reasons discussed in the preamble, and under the authority of 12 U.S.C. 93a, the Office of the Comptroller of the Currency revises 12 CFR part 25 as follows:

PART 25—COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT PRODUCTION REGULATIONS

Subpart A—General

Sec.
25.11
Authority, purposes, and scope.
25.12
Definitions.

Subpart B—Standards for Assessing Performance

25.21
Performance tests, standards, and ratings, in general.
25.22
Lending test.
25.23
Investment test.
25.24
Service test.
25.25
Community development test for wholesale or limited purpose banks and savings associations.
25.26
Small bank and savings association performance standards.
25.27
Strategic plan.
25.28
Assigned ratings.
25.29
Effect of CRA performance on applications.

Subpart C—Records, Reporting, and Disclosure Requirements

25.41

Assessment area delineation.

25.42
Data collection, reporting, and disclosure.
25.43
Content and availability of public file.
25.44
Public notice by banks and savings associations.
25.45
Publication of planned examination schedule.

Subpart D—Transition Provisions

25.51
Consideration of Bank Activities.
25.52
Strategic Plan Retention.

Subpart E—Prohibition Against Use of Interstate Branches Primarily for Deposit Production

25.61
Purpose and scope.
25.62
Definitions.
25.63
Loan-to-deposit ratio screen.
25.64
Credit needs determination.
25.65
Sanctions.
Appendix A to Part 25—Ratings

Appendix B to Part 25—CRA Notice

Authority:

12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 215a, 481, 1462a, 1463, 1464, 1814, 1816, 1828(c), 1835a, 2901 through 2908, 3101 through 3111, and 5412(b)(2)(B).

Subpart A—General

§ 25.11
Authority, purposes, and scope.

(a)
Authority and OMB control number
—(1)
Authority.
The authority for subparts A, B, C, D, and E is 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 215a, 481, 1462a, 1463, 1464, 1814, 1816, 1828(c), 1835a, 2901 through 2908, 3101 through 3111, and 5412(b)(2)(B).

(2)
OMB control number.
The information collection requirements contained in this part were approved by the Office of Management and Budget under the provisions of 44 U.S.C. 3501
et seq.
and have been assigned OMB control number 1557-0160.

(b)
Purposes.
In enacting the Community Reinvestment Act (CRA), the Congress required each appropriate Federal financial supervisory agency to assess an institution's record of helping to meet the credit needs of the local communities in which the institution is chartered, consistent with the safe and sound operation of the institution, and to take this record into account in the agency's evaluation of an application for a deposit facility by the institution. This part is intended to carry out the purposes of the CRA by:

(1) Establishing the framework and criteria by which the Office of the Comptroller of the Currency (OCC) or the Federal deposit Insurance Corporation (FDIC), as appropriate, assesses a bank's or savings association's record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the bank or savings association; and

(2) Providing that the OCC takes that record into account in considering certain applications.

(c)
Scope
—(1)
General.
(i) Subparts A, B, C, and D, and Appendices A and B, apply to all banks and savings associations except as provided in paragraphs (c)(2) and (3) of this section. Subpart E only applies to banks.

(ii) With respect to subparts A, B, C, and D, and Appendices A and B—

(A) The OCC has the authority to prescribe these regulations for national banks, Federal savings associations, and State savings associations and has the authority to enforce these regulations for national banks and Federal savings associations.

(B) The FDIC has the authority to enforce these regulations for State savings associations.

(iii) With respect to subparts A, B, C, and D, and appendix A, references to appropriate Federal banking agency will mean the OCC when the institution is a national bank or Federal savings association and the FDIC when the institution is a State savings association.

(2)
Federal branches and agencies.
(i) This part applies to all insured Federal branches and to any Federal branch that is uninsured that results from an acquisition described in section 5(a)(8) of the International Banking Act of 1978 (12 U.S.C. 3103(a)(8)).

(ii) Except as provided in paragraph (c)(2)(i) of this section, this part does not apply to Federal branches that are uninsured, limited Federal branches, or Federal agencies, as those terms are defined in part 28 of this chapter.

(3)
Certain special purpose banks and savings associations.
This part does not apply to special purpose banks or special purpose savings associations that do not perform commercial or retail banking services by granting credit to the public in the ordinary course of business, other than as incident to their specialized operations. These banks or savings associations include banker's banks, as defined in 12 U.S.C. 24 (Seventh), and banks or savings associations that engage only in one or more of the following activities: Providing cash management controlled disbursement services or serving as correspondent banks or savings associations, trust companies, or clearing agents.

§ 25.12
Definitions.
For purposes of subparts A, B, C, and D, and Appendices A and B, of this part, the following definitions apply:

(a)
Affiliate
means any company that controls, is controlled by, or is under common control with another company. The term “control” has the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company is under common control with another company if both companies are directly or indirectly controlled by the same company.

(b)
Area median income
means:

(1) The median family income for the MSA, if a person or geography is located in an MSA, or for the metropolitan division, if a person or geography is located in an MSA that has been subdivided into metropolitan divisions; or

(2) The statewide nonmetropolitan median family income, if a person or geography is located outside an MSA.

(c)
Assessment area
means a geographic area delineated in accordance with § 25.41.

(d)
Automated teller machine (ATM)
means an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank or savings association at which deposits are received, cash dispersed, or money lent.

(e)(1)
Bank or savings association
means, except as provided in § 25.11(c), a national bank (including a Federal branch as defined in part 28 of this chapter) with Federally insured deposits or a savings association;

(2)
Bank and savings association
means, except as provided in § 25.11(c), a national bank (including a Federal branch as defined in part 28 of this chapter) with Federally insured deposits and a savings association.

(f)
Branch
means a staffed banking facility authorized as a branch, whether shared or unshared, including, for example, a mini-branch in a grocery store or a branch operated in conjunction with any other local business or nonprofit organization.

(g)
Community development
means:

(1) Affordable housing (including multifamily rental housing) for low- or moderate-income individuals;

(2) Community services targeted to low- or moderate-income individuals;

(3) Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration's Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or

(4) Activities that revitalize or stabilize—

(i) Low-or moderate-income geographies;

(ii) Designated disaster areas; or

(iii) Distressed or underserved nonmetropolitan middle-income

geographies designated by the Board of Governors of the Federal Reserve System, FDIC, and the OCC, based on—

(A) Rates of poverty, unemployment, and population loss; or

(B) Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals.

(h)
Community development loan
means a loan that:

(1) Has as its primary purpose community development; and

(2) Except in the case of a wholesale or limited purpose bank or savings association:

(i) Has not been reported or collected by the bank or savings association or an affiliate for consideration in the bank's or savings association's assessment as a home mortgage, small business, small farm, or consumer loan, unless the loan is for a multifamily dwelling (as defined in § 1003.2(n) of this title); and

(ii) Benefits the bank's or savings association's assessment area(s) or a broader statewide or regional area(s) that includes the bank's or savings association's assessment area(s).

(i)
Community development service
means a service that:

(1) Has as its primary purpose community development;

(2) Is related to the provision of financial services; and

(3) Has not been considered in the evaluation of the bank's or savings association's retail banking services under § 25.24(d).

(j)
Consumer loan
means a loan to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. Consumer loans include the following categories of loans:

(1)
Motor vehicle loan,
which is a consumer loan extended for the purchase of and secured by a motor vehicle;

(2)
Credit card loan,
which is a line of credit for household, family, or other personal expenditures that is accessed by a borrower's use of a “credit card,” as this term is defined in § 1026.2 of this title;

(3)
Other secured consumer loan,
which is a secured consumer loan that is not included in one of the other categories of consumer loans; and

(4)
Other unsecured consumer loan,
which is an unsecured consumer loan that is not included in one of the other categories of consumer loans.

(k)
Geography
means a census tract delineated by the United States Bureau of the Census in the most recent decennial census.

(l)
Home mortgage loan
means a closed-end mortgage loan or an open-end line of credit as these terms are defined under § 1003.2 of this title, and that is not an excluded transaction under § 1003.3(c)(1) through (10) and (13) of this title.

(m)
Income level
includes:

(1)
Low-income,
which means an individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography.

(2)
Moderate-income,
which means an individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 and less than 80 percent, in the case of a geography.

(3)
Middle-income,
which means an individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 and less than 120 percent, in the case of a geography.

(4)
Upper-income,
which means an individual income that is 120 percent or more of the area median income, or a median family income that is 120 percent or more, in the case of a geography.

(n)
Limited purpose bank
or savings association means a bank or savings association that offers only a narrow product line (such as credit card or motor vehicle loans) to a regional or broader market and for which a designation as a limited purpose bank or savings association is in effect, in accordance with § 25.25(b).

(o)
Loan location.
A loan is located as follows:

(1) A consumer loan is located in the geography where the borrower resides;

(2) A home mortgage loan is located in the geography where the property to which the loan relates is located; and

(3) A small business or small farm loan is located in the geography where the main business facility or farm is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.

(p)
Loan production office
means a staffed facility, other than a branch, that is open to the public and that provides lending-related services, such as loan information and applications.

(q)
Metropolitan division
means a metropolitan division as defined by the Director of the Office of Management and Budget.

(r)
MSA
means a metropolitan statistical area as defined by the Director of the Office of Management and Budget.

(s)
Nonmetropolitan area
means any area that is not located in an MSA.

(t)
Qualified investment
means a lawful investment, deposit, membership share, or grant that has as its primary purpose community development.

(u)
Small bank or savings association
—(1)
Definition. Small bank or savings association
means a bank or savings association that, as of December 31 of either of the prior two calendar years, had assets of less than $1.322 billion.
Intermediate small bank or savings association
means a small bank or savings association with assets of at least $330 million as of December 31 of both of the prior two calendar years and less than $1.322 billion as of December 31 of either of the prior two calendar years.

(2)
Adjustment.
The dollar figures in paragraph (u)(1) of this section shall be adjusted annually and published by the appropriate Federal banking agency, based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each twelve-month period ending in November, with rounding to the nearest million.

(v)
Small business loan
means a loan included in “loans to small businesses” as defined in the instructions for preparation of the Consolidated Report of Condition and Income.

(w)
Small farm loan
means a loan included in “loans to small farms” as defined in the instructions for preparation of the Consolidated Report of Condition and Income.

(x)
Wholesale bank or savings association
means a bank or savings association that is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale bank or savings association is in effect, in accordance with § 25.25(b).

Subpart B—Standards for Assessing Performance

§ 25.21
Performance tests, standards, and ratings, in general.

(a)
Performance tests and standards.
The appropriate Federal banking agency assesses the CRA performance of a bank or savings association in an examination as follows:

(1)
Lending, investment, and service tests.
The appropriate Federal banking agency applies the lending, investment, and service tests, as provided in §§ 25.22 through 25.24, in evaluating the performance of a bank or savings association, except as provided in

paragraphs (a)(2), (3), and (4) of this section.

(2)
Community development test for wholesale or limited purpose banks and savings associations.
The appropriate Federal banking agency applies the community development test for a wholesale or limited purpose bank or savings association, as provided in § 25.25, except as provided in paragraph (a)(4) of this section.

(3)
Small bank and savings association performance standards.
The appropriate Federal banking agency applies the small bank or savings association performance standards as provided in § 25.26 in evaluating the performance of a small bank or savings association or a bank or savings association that was a small bank or savings association during the prior calendar year, unless the bank or savings association elects to be assessed as provided in paragraphs (a)(1), (2), or (4) of this section. The bank or savings association may elect to be assessed as provided in paragraph (a)(1) of this section only if it collects and reports the data required for other banks or savings associations under § 25.42.

(4)
Strategic plan.
The appropriate Federal banking agency evaluates the performance of a bank or savings association under a strategic plan if the bank or savings association submits, and the appropriate Federal banking agency approves, a strategic plan as provided in § 25.27.

(b)
Performance context.
The appropriate Federal banking agency applies the tests and standards in paragraph (a) of this section and also considers whether to approve a proposed strategic plan in the context of:

(1) Demographic data on median income levels, distribution of household income, nature of housing stock, housing costs, and other relevant data pertaining to a bank's or savings association's assessment area(s);

(2) Any information about lending, investment, and service opportunities in the bank's or savings association's assessment area(s) maintained by the bank or savings association or obtained from community organizations, state, local, and tribal governments, economic development agencies, or other sources;

(3) The bank's or savings association's product offerings and business strategy as determined from data provided by the bank or savings association;

(4) Institutional capacity and constraints, including the size and financial condition of the bank or savings association, the economic climate (national, regional, and local), safety and soundness limitations, and any other factors that significantly affect the bank's or savings association's ability to provide lending, investments, or services in its assessment area(s);

(5) The bank's or savings association's past performance and the performance of similarly situated lenders;

(6) The bank's or savings association's public file, as described in § 25.43, and any written comments about the bank's or savings association's CRA performance submitted to the bank or savings association or the appropriate Federal banking agency; and

(7) Any other information deemed relevant by the appropriate Federal banking agency.

(c)
Assigned ratings.
The appropriate Federal banking agency assigns to a bank or savings association one of the following four ratings pursuant to § 25.28 and appendix A of this part: “outstanding”; “satisfactory”; “needs to improve”; or “substantial noncompliance” as provided in 12 U.S.C. 2906(b)(2). The rating assigned by the appropriate Federal banking agency reflects the bank's or savings association's record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the bank or savings association.

(d)
Safe and sound operations.
This part and the CRA do not require a bank or savings association to make loans or investments or to provide services that are inconsistent with safe and sound operations. To the contrary, the appropriate Federal banking agency anticipates banks and savings associations can meet the standards of this part with safe and sound loans, investments, and services on which the banks and savings associations expect to make a profit. Banks and savings associations are permitted and encouraged to develop and apply flexible underwriting standards for loans that benefit low- or moderate-income geographies or individuals, only if consistent with safe and sound operations.

(e)
Low-cost education loans provided to low-income borrowers.
In assessing and taking into account the record of a bank or savings association under this part, the appropriate Federal banking agency considers, as a factor, low-cost education loans originated by the bank or savings association to borrowers, particularly in its assessment area(s), who have an individual income that is less than 50 percent of the area median income. For purposes of this paragraph, “low-cost education loans” means any education loan, as defined in section 140(a)(7) of the Truth in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a State or local education loan program), originated by the bank or savings association for a student at an “institution of higher education,” as that term is generally defined in sections 101 and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002) and the implementing regulations published by the U.S. Department of Education, with interest rates and fees no greater than those of comparable education loans offered directly by the U.S. Department of Education. Such rates and fees are specified in section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e).

(f)
Activities in cooperation with minority- or women-owned financial institutions and low-income credit unions.
In assessing and taking into account the record of a nonminority-owned and nonwomen-owned bank or savings association under this part, the appropriate Federal banking agency considers as a factor capital investment, loan participation, and other ventures undertaken by the bank or savings association in cooperation with minority- and women-owned financial institutions and low-income credit unions. Such activities must help meet the credit needs of local communities in which the minority- and women-owned financial institutions and low-income credit unions are chartered. To be considered, such activities need not also benefit the bank's or savings association's assessment area(s) or the broader statewide or regional area(s) that includes the bank's or savings association's assessment area(s).

§ 25.22
Lending test.

(a)
Scope of test.
(1) The lending test evaluates a bank's or savings association's record of helping to meet the credit needs of its assessment area(s) through its lending activities by considering a bank's or savings association's home mortgage, small business, small farm, and community development lending. If consumer lending constitutes a substantial majority of a bank's or savings association's business, the appropriate Federal banking agency will evaluate the bank's or savings association's consumer lending in one or more of the following categories: motor vehicle, credit card, other secured, and other unsecured loans. In addition, at a bank's or savings association's option, the appropriate Federal banking agency will evaluate one or more categories of consumer lending, if the bank or savings association has collected and maintained, as required in § 25.42(c)(1),

the data for each category that the bank or savings association elects to have the appropriate Federal banking agency evaluate.

(2) The appropriate Federal banking agency considers originations and purchases of loans. The appropriate Federal banking agency will also consider any other loan data the bank or savings association may choose to provide, including data on loans outstanding, commitments and letters of credit.

(3) A bank or savings association may ask the appropriate Federal banking agency to consider loans originated or purchased by consortia in which the bank or savings association participates or by third parties in which the bank or savings association has invested only if the loans meet the definition of community development loans and only in accordance with paragraph (d) of this section. The appropriate Federal banking agency will not consider these loans under any criterion of the lending test except the community development lending criterion.

(b)
Performance criteria.
The appropriate Federal banking agency evaluates a bank's or savings association's lending performance pursuant to the following criteria:

(1)
Lending activity.
The number and amount of the bank's or savings association's home mortgage, small business, small farm, and consumer loans, if applicable, in the bank's or savings association's assessment area(s);

(2)
Geographic distribution.
The geographic distribution of the bank's or savings association's home mortgage, small business, small farm, and consumer loans, if applicable, based on the loan location, including:

(i) The proportion of the bank's or savings association's lending in the bank's or savings association's assessment area(s);

(ii) The dispersion of lending in the bank's or savings association's assessment area(s); and

(iii) The number and amount of loans in low-, moderate-, middle-, and upper-income geographies in the bank's or savings association's assessment area(s);

(3)
Borrower characteristics.
The distribution, particularly in the bank's or savings association's assessment area(s), of the bank's or savings association's home mortgage, small business, small farm, and consumer loans, if applicable, based on borrower characteristics, including the number and amount of:

(i) Home mortgage loans to low-, moderate-, middle-, and upper-income individuals;

(ii) Small business and small farm loans to businesses and farms with gross annual revenues of $1 million or less;

(iii) Small business and small farm loans by loan amount at origination; and

(iv) Consumer loans, if applicable, to low-, moderate-, middle-, and upper-income individuals;

(4)
Community development lending.
The bank's or savings association's community development lending, including the number and amount of community development loans, and their complexity and innovativeness; and

(5)
Innovative or flexible lending practices.
The bank's or savings association's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies.

(c)
Affiliate lending.
(1) At a bank's or savings association's option, the appropriate Federal banking agency will consider loans by an affiliate of the bank or savings association, if the bank or savings association provides data on the affiliate's loans pursuant to § 25.42.

(2) The appropriate Federal banking agency considers affiliate lending subject to the following constraints:

(i) No affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase; and

(ii) If a bank or savings association elects to have the appropriate Federal banking agency consider loans within a particular lending category made by one or more of the bank's or savings association's affiliates in a particular assessment area, the bank or savings association shall elect to have the appropriate Federal banking agency consider, in accordance with paragraph (c)(1) of this section, all the loans within that lending category in that particular assessment area made by all of the bank's or savings association's affiliates.

(3) The appropriate Federal banking agency does not consider affiliate lending in assessing a bank's or savings association's performance under paragraph (b)(2)(i) of this section.

(d)
Lending by a consortium or a third party.
Community development loans originated or purchased by a consortium in which the bank or savings association participates or by a third party in which the bank or savings association has invested:

(1) Will be considered, at the bank's or savings association's option, if the bank or savings association reports the data pertaining to these loans under § 25.42(b)(2); and

(2) May be allocated among participants or investors, as they choose, for purposes of the lending test, except that no participant or investor:

(i) May claim a loan origination or loan purchase if another participant or investor claims the same loan origination or purchase; or

(ii) May claim loans accounting for more than its percentage share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.

(e)
Lending performance rating.
The appropriate Federal banking agency rates a bank's or savings association's lending performance as provided in appendix A of this part.

§ 25.23
Investment test.

(a)
Scope of test.
The investment test evaluates a bank's or savings association's record of helping to meet the credit needs of its assessment area(s) through qualified investments that benefit its assessment area(s) or a broader statewide or regional area that includes the bank's or savings association's assessment area(s).

(b)
Exclusion.
Activities considered under the lending or service tests may not be considered under the investment test.

(c)
Affiliate investment.
At a bank's or savings association's option, the appropriate Federal banking agency will consider, in its assessment of a bank's or savings association's investment performance, a qualified investment made by an affiliate of the bank or savings association, if the qualified investment is not claimed by any other institution.

(d)
Disposition of branch premises.
Donating, selling on favorable terms, or making availa

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2021-27171. Public record. Not legal advice.