FDIC Federal Register Citations

        
    Note: There is one exception to the Composite Rating matrix. An
institution may not receive a rating of ``satisfactory'' unless it
receives at least ``low satisfactory'' on the lending test.
Therefore, the total points are capped at three times the lending
test score.

Sec.  ----.28(b) Lending, investment, and service test
ratings

    Sec.  ----.28(b)--1: How is performance under the
quantitative and qualitative performance criteria weighed when
examiners assign a CRA rating?
    A2. The lending, investment, and service tests each contain a
number of performance criteria designed to measure whether an
institution is effectively helping to meet the credit needs of its
entire community, including low- and moderate-income neighborhoods, in
a safe and sound manner. Some of these performance criteria are
quantitative, such as number and amount, and others, such as the use of
innovative or flexible lending practices, the innovativeness or
complexity of qualified investments, and the innovativeness and
responsiveness of community development services, are qualitative. The
performance criteria that deal with these qualitative aspects of
performance recognize that these loans, qualified investments, and
community development services sometimes require special expertise and
effort on the part of the institution and provide a benefit to the
community that would not otherwise be possible. As such, the agencies
consider the qualitative aspects of an institution's activities when

[[Page 37951]]

measuring the benefits received by a community. An institution's
performance under these qualitative criteria may augment the
consideration given to an institution's performance under the
quantitative criteria of the regulations, resulting in a higher level
of performance and rating.

Sec.  ----.28(c) Effect of evidence of discriminatory or other illegal
credit practices

    Sec.  ----.28(c)--1: What is meant by ``discriminatory or other
illegal credit practices''?
    A1. An institution engages in discriminatory credit practices if it
discourages or discriminates against credit applicants or borrowers on
a prohibited basis, in violation, for example, of the Fair Housing Act
or the Equal Credit Opportunity Act (as implemented by Regulation B).
Examples of other illegal credit practices inconsistent with helping to
meet community credit needs include violations of:
     The Truth in Lending Act regarding rescission of certain
mortgage transactions and regarding disclosures and certain loan term
restrictions in connection with credit transactions that are subject to
the Home Ownership and Equity Protection Act;
     The Real Estate Settlement Procedures Act regarding the
giving and accepting of referral fees, unearned fees or kickbacks in
connection with certain mortgage transactions; and
     The Federal Trade Commission Act regarding unfair or
deceptive acts or practices. Examiners will determine the effect of
evidence of illegal credit practices as set forth in examination
procedures and Sec.  ----.28(c) of the regulation.
    Violations of other provisions of the consumer protection laws
generally will not adversely affect an institution's CRA rating, but
may warrant the inclusion of comments in an institution's performance
evaluation. These comments may address the institution's policies,
procedures, training programs, and internal assessment efforts.

Sec.  ----.29 Effect of CRA performance on applications.

Sec.  ----.29(a) CRA performance.

    Sec.  ----.29(a)--1: What weight is given to an institution's CRA
performance examination in reviewing an application?
    A1. In [cases]reviewing applications in which CRA
performance is a relevant factor, information from a CRA[ performance]
examination of the institution is a particularly important
consideration[ in the application process because it
represents]. The examination is a detailed evaluation of
the institution's CRA performance by its Federal supervisory agency. In
this light, an examination is an important, and often controlling,
factor in the consideration of an institution's record. In some cases,
however, the examination may not be recentor a specific
issue raised in the application process, such as progress in addressing
weaknesses noted by examiners, progress in implementing commitments
previously made to the reviewing agency, or a supported allegation from
a commenter, is relevant to CRA performance under the regulation and
was not addressed in the examination. In these circumstances, the
applicant should present sufficient information to supplement its
record of performance and to respond to the substantive issues raised
in the application proceeding.
    Sec.  ----.29(a)--2: What consideration is given to an
institution's commitments for future action in reviewing an application
by those agencies that consider such commitments?
    A2. Commitments for future action are not viewed as part of the CRA
record of performance. In general, institutions cannot use commitments
made in the applications process to overcome a seriously deficient
record of CRA performance. However, commitments for improvements in an
institution's performance may be appropriate to address specific
weaknesses in an otherwise satisfactory record or to address CRA
performance when a financially troubled institution is being acquired.

Sec.  ----.29(b) Interested parties.

    Sec.  ----.29(b)--1: What consideration is given to comments from
interested parties in reviewing an application?
    A1. Materials relating to CRA performance received during the
[applications]application process can provide valuable
information. Written comments, which may express either support for or
opposition to the application, are made a part of the record in
accordance with the agencies' procedures, and are carefully considered
in making the agencies' [decision]decisions. Comments
should be supported by facts about the applicant's performance and
should be as specific as possible in explaining the basis for
supporting or opposing the application. These comments must be
submitted within the time limits provided under the agencies'
procedures.
    Sec.  ----.29(b)--2: Is an institution required to enter into
agreements with private parties?
    A2. No. Although communications between an institution and members
of its community may provide a valuable method for the institution to
assess how best to address the credit needs of the community, the CRA
does not require an institution to enter into agreements with private
parties. [These agreements are not monitored or enforced by the
agencies.]The agencies do not monitor compliance with nor
enforce these agreements.

Sec.  ----.41 Assessment area delineation.

Sec.  ----.41(a) In general.

    Sec.  ----.41(a)--1: How do the agencies evaluate ``assessment
areas'' under the [revised] CRA regulations[ compared to how they
evaluated ``local communities'' that institutions delineated under the
original CRA regulations]?
    A1. The[ revised] rule focuses on the distribution and level of an
institution's lending, investments, and services rather than on how and
why an institution delineated its[ ``local community'' or] assessment
area(s) in a particular manner. Therefore, the agencies will not
evaluate an institution's delineation of its assessment area(s) as a
separate performance criterion[as they did under the original
regulation]. Rather, the agencies will only review whether the
assessment area delineated by the institution complies with the
limitations set forth in the regulations at Sec.  ----.41(e).
    Sec.  ----.41(a)--2: If an institution elects to have the agencies
consider affiliate lending, will this decision affect the institution's
assessment area(s)?
    A2. If an institution elects to have the lending activities of its
affiliates considered in the evaluation of the institution's lending,
the geographies in which the affiliate lends do not affect the
institution's delineation of assessment area(s).
    Sec.  ----.41(a)--3: Can a financial institution identify a
specific  racial or ethnic group rather than a geographic
area as its assessment area?
    A3. No, assessment areas must be based on geography. The
only exception to the requirement to delineate an assessment area based
on geography is that an institution, the business of which
predominantly consists of serving the needs of military personnel or
their dependents who are not located within a defined geographic area,
may delineate its entire deposit customer base as its assessment
area.

[[Page 37952]]

Sec.  ----.41(c) Geographic area(s) for institutions other than
wholesale or limited purpose institutions.

Sec.  ----.41(c)(1) Generally consist of one or more MSAs or
metropolitan divisions or one or more contiguous political
subdivisions.

    Sec.  ----.41(c)(1)--1: Besides cities, towns, and counties, what
other units of local government are political subdivisions for CRA
purposes?
    A1. Townships and Indian reservations are political subdivisions
for CRA purposes. Institutions should be aware that the boundaries of
townships and Indian reservations may not be consistent with the
boundaries of the census tracts [or block numbering areas ]
(``geographies'') in the area. In these cases, institutions must ensure
that their assessment area(s) consists only of whole geographies by
adding any portions of the geographies that lie outside the political
subdivision to the delineated assessment area(s).
    Sec.  ----.41(c)(1)--2: Are wards, school districts, voting
districts, and water districts political subdivisions for CRA purposes?
    A2. No. However, an institution that determines that it
predominantly serves an area that is smaller than a city,
townor other political subdivision may delineate as its
assessment area the larger political subdivision and then, in
accordance with 12 CFR [Sec.  ] ----.41(d), adjust the
boundaries of the assessment area to include only the portion of the
political subdivision that it reasonably can be expected to serve. The
smaller area that the institution delineates must consist of entire
geographies, may not reflect illegal discrimination, and may not
arbitrarily exclude low- or moderate-income geographies.

Sec.  ----.41(d) Adjustments to geographic area(s).

    Sec.  ----.41(d)--1: When may an institution adjust the boundaries
of an assessment area to include only a portion of a political
subdivision?
    A1. Institutions must include whole geographies (i.e., census
tracts[ or block numbering areas]) in their assessment areas and
generally should include entire political subdivisions. Because census
tracts [and block numbering areas] are the common geographic areas used
consistently nationwide for data collection, the agencies require that
assessment areas be made up of whole geographies. If including an
entire political subdivision would create an area that is larger than
the area the institution can reasonably be expected to serve, an
institution may, but is not required to, adjust the boundaries of its
assessment area to include only portions of the political subdivision.
For example, this adjustment is appropriate if the assessment area
would otherwise be extremely large, of unusual configuration, or
divided by significant geographic barriers (such as a river, mountain,
or major highway system). When adjusting the boundaries of their
assessment areas, institutions must not arbitrarily exclude low- or
moderate-income geographies or set boundaries that reflect illegal
discrimination.

Sec.  ----.41(e) Limitations on delineation of an assessment area.

Sec.  ----.41(e)(3) May not arbitrarily exclude low- or moderate-income
geographies.

    Sec.  ----.41(e)(3)--1: How will examiners determine whether an
institution has arbitrarily excluded low- or moderate-income
geographies?
    A1. Examiners will make this determination on a case-by-case basis
after considering the facts relevant to the institution's assessment
area delineation. Information that examiners will consider may include:
     Income levels in the institution's assessment area(s) and
surrounding geographies;
     Locations of branches and deposit-taking ATMs;
     Loan distribution in the institution's assessment area(s)
and surrounding geographies;
     The institution's size;
     The institution's financial condition; and
     The business strategy, corporate structure and product
offerings of the institution.

Sec.  ----.41(e)(4) May not extend substantially beyond [a
CMSA]an MSA boundary or beyond a state boundary unless
located in a multistate MSA.

    Sec.  ----.41(e)(4)--1: What are the maximum limits on the size of
an assessment area?
    A1. An institution [shall]may not delineate an
assessment area extending substantially across the boundaries of [a
consolidated metropolitan statistical area (CMSA) or the boundaries of
an MSA, if the MSA is not located in a CMSA.]an MSA unless the
MSA is in a combined statistical area (CSA)). Although more than one
MSA in a CSA may be delineated as a single assessment area, an
institution's CRA performance in individual MSAs in those assessment
areas will be evaluated using separate median family incomes and other
relevant information at the MSA level rather than at the CSA
level.
    [Similarly, an]An assessment area also
may not extend substantially across state boundaries unless the
assessment area is located in a multistate MSA. An institution may not
delineate a whole state as its assessment area unless the entire state
is contained within [a CMSA]an MSA  . These limitations
apply to wholesale and limited purpose institutions as well as other
institutions.
    An institution [shall]must delineate separate
assessment areas for the areas inside and outside [a CMSA (or MSA if
the MSA is not located in a CMSA)]an MSA if the area
served by the institution's branches outside the [CMSA (or
MSA)]MSA extends substantially beyond the [CMSA (or
MSA)]MSA boundary. Similarly, the institution
[shall]must delineate separate assessment areas for the
areas inside and outside of a state if the institution's branches
extend substantially beyond the boundary of one state (unless the
assessment area is located in a multistate MSA). In addition, the
institution'should also delineate separate assessment areas if it has
branches in areas within the same state that are widely separate and
not at all contiguous. For example, an institution that has its main
office in New York City and a branch in Buffalo, New York, and each
office serves only the immediate areas around it, should delineate two
separate assessment areas.
    Sec.  ----.41(e)(4)--2: [Can]May an institution
delineate one assessment area that consists of an MSA and two large
counties that abut the MSA but are not adjacent to each other?
    A2. As a general rule, an institution's assessment area should not
extend substantially beyond the boundary of an MSA [if the MSA is not
located in a CMSA]. Therefore, the MSA would be a separate assessment
area, and because the two abutting counties are not adjacent to each
other and, in this example, extend substantially beyond the boundary of
the MSA, the institution would delineate each county as a separate
assessment area[ (, so], assuming branches or deposit-taking
ATMs are located in each county and the MSA. So , in this
example, there would be three assessment areas[)]. [However, if the MSA
and the two counties were in the same CMSA, then the institution could
delineate only one assessment area including them all.]However,
if the MSA and the two counties were in the same CSA, then the
institution could delineate only one assessment area including them
all. But, the institution's CRA performance in the

[[Page 37953]]

MSAs and the non-MSA counties in that assessment area would be
evaluated using separate median family incomes and other relevant
information at the MSA and state, non-MSA level, rather than at the CSA
level.

Sec.  ----.42 Data collection, reporting, and disclosure.

    Sec.  ----.42--1: When must an institution collect and report data
under the CRA regulations?
    A1. All institutions except small institutions are subject to data
collection and reporting requirements. (``Small institution'' is
defined in the agencies' CRA regulations at Sec.  ----.12(u).) Examples
describing the data collection requirements of institutions, in
particular those that have just surpassed the asset-size threshold of a
small institution, may be found on the FFIEC Web site at http://www.ffiec.gov/cra.
[A small institution is an institution that,

as of December 31 of either of the prior two calendar years, had total
assets of less than $1 billion (as adjusted).
    For example (assuming no adjustment to the $1 billion small bank
asset level):
 

    All institutions that are subject to the data collection and
reporting requirements must report the data for a calendar year by
March 1 of the subsequent year. [In the example, above, the institution
would report the data collected for calendar year 2010 by March 1,
2011.]
    The Board of Governors of the Federal Reserve System [is handling
the processing of]  processes  the reports for all of the
primary regulators. [The reports should be submitted in a prescribed
electronic format on a timely basis. The mailing address for submitting
these reports is: Attention: CRA Processing, Board of Governors of the
Federal Reserve System, 1709 New York Avenue, NW., 5th Floor,
Washington, DC 20006].
     Data may be submitted on diskette, CD-ROM, or via Internet
e-mail. CRA respondents are encouraged to send their data via the
Internet. E-mail a properly encrypted CRA file (using the FFIEC
software only Internet e-mail export feature) to the following e-mail
address: crasub@frb.gov. Please mail diskette or CD-ROM submissions to:
Board of Governors of the Federal Reserve System, Attention: CRA
Processing, 20th & Constitution Avenue, NW., MS N502, Washington, DC
20551-0001.
    Sec.  ----.42--2: Should an institution develop its own program for
data collection, or will the regulators require a certain format?
    A2. An institution may use the free software that is provided by
the FFIEC to reporting institutions for data collection and reporting
or develop its own program. Those institutions that develop their own
programs [must follow the precise format for the new CRA data
collection and reporting rules. This format may be obtained by
contacting the CRA Assistance Line at (202) 872-7584.]  may
create a data submission using the File Specifications and Edit
Validation Rules that have been set forth to assist with electronic
data submissions. For information about specific electronic formatting
procedures, contact the CRA Assistance Line at (202) 872-7584 or click
on ``How to File'' at http://www.ffiec.gov/cra.

    Sec.  ----.42--3: How should an institution report data on lines of
credit?
    A3. Institutions must collect and report data on lines of credit in
the same way that they provide data on loan originations. Lines of
credit are considered originated at the time the line is approved or
increased; and an increase is considered a new origination. Generally,
the full amount of the credit line is the amount that is considered
originated. In the case of an increase to an existing line, the amount
of the increase is the amount that is considered originated and that
amount should be reported. However, consistent with the Call Report and
TFR instructions, institutions would not report an increase to a small
business or small farm line of credit if the increase would cause the
total line of credit to exceed $1 million, in the case of a small
business line, or $500,000, in the case of a small farm line. Of
course, institutions may provide information about such line increases
to examiners as other loan data.
    Sec.  ----.42--4: Should renewals of lines of credit be collected
and/or reported?
    A4. Renewals of lines of credit for small business, small farm[ or]
 ,  consumer , or community development 
purposes should be collected and reported, if applicable, in the same
manner as renewals of small business or small farm loans. See 
Q&A  Sec.  ----.42(a)--5. Institutions that are HMDA reporters
continue to collect and report home equity lines of credit at their
option in accordance with the requirements of 12 CFR part 203.
    Sec.  ----.42--5: When should merging institutions collect data?
    A5. Three scenarios of data collection responsibilities for the
calendar year of a merger and subsequent data reporting
responsibilities are described below.
     Two institutions are exempt from CRA collection and
reporting requirements because of asset size. The institutions merge.
No data collection is required for the year in which the merger takes
place, regardless of the resulting asset size. Data collection would
begin after two consecutive years in which the combined institution had
year-end assets [of at least $250 million or was part of a holding
company that had year-end banking and thrift assets of at least $1
billion]  at least equal to the small institution asset-size
threshold amount described in 12 CFR ----.12(u)(1).
     Institution A, an institution required to collect and
report the data, and Institution B, an exempt institution, merge.
Institution A is the surviving institution. For the year of the merger,
data collection is required for Institution A's transactions. Data
collection is optional for the transactions of the previously exempt
institution. For the following year, all transactions of the surviving
institution must be collected and reported.
     Two institutions that each are required to collect and
report the data merge. Data collection is required for the entire year
of the merger and for subsequent years so long as the surviving
institution is not exempt. The

[[Page 37954]]

surviving institution may file either a consolidated submission or
separate submissions for the year of the merger but must file a
consolidated report for subsequent years.
    Sec.  ----.42--6: Can small institutions get a copy of the data
collection software even though they are not required to collect or
report data?
    A6. Yes. Any institution that is interested in receiving a copy of
the software [may send a written request to: Attn.: CRA Processing,
Board of Governors of the Federal Reserve System, 1709 New York Ave,
NW., 5th Floor, Washington, DC 20006. They]  may download it
from the FFIEC Web site at http://www.ffiec.gov/cra. For assistance,

institutions  may [also] call the CRA Assistance Line at (202)
872-7584 or send [Internet]  an  e-mail to
CRAHELP@FRB.GOV.

    Sec.  ----.42--7: If a small institution is designated a wholesale
or limited purpose institution, must it collect data that it would not
otherwise be required to collect because it is a small institution?
    A7. No. However, small institutions  that are designated as
wholesale or limited purpose institutions  must be prepared to
identify those loans, investments, and services to be evaluated under
the community development test.

Sec.  ----.42(a) Loan information required to be collected and
maintained.

    Sec.  ----.42(a)--1: Must institutions collect and report data on
all commercial loans [under]  of  $1 million  or
less  at origination?
    A1. No. Institutions that are not exempt from data collection and
reporting are required to collect and report only those commercial
loans that they capture in the Call Report, Schedule RC-C, Part II, and
in the TFR, Schedule SB. Small business loans are defined as those
whose original amounts are $1 million or less and that were reported as
either ``Loans secured by nonfarm or nonresidential real estate'' or
``Commercial and Industrial loans'' in Part I of the Call Report or
TFR.
    Sec.  ----.42(a)-- 2: For loans defined as small business loans,
what information should be collected and maintained?
    A2. Institutions that are not exempt from data collection and
reporting are required to collect and maintain  ,  in a
standardized, machine  --  readable format, information
on each small business loan originated or purchased for each calendar
year:
     A unique number or alpha-numeric symbol that can be used
to identify the relevant loan file;
     The loan amount at origination;
     The loan location; and
     An indicator whether the loan was to a business with gross
annual revenues of $1 million or less.
    The location of the loan must be maintained by census tract [ or
block numbering area]. In addition, supplemental information contained
in the file specifications includes a date associated with the
origination or purchase and whether a loan was originated or purchased
by an affiliate. The same requirements apply to small farm loans.
    Sec.  ----.42(a)--3: Will farm loans need to be segregated from
business loans?
    A3. Yes.
    Sec.  ----.42(a)--4: Should institutions collect and report data on
all agricultural loans [under] of $500,000 or
less at origination?
    A4. Institutions are to report those farm loans that they capture
in the Call Report, Schedule RC-C, Part II and Schedule SB of the TFR.
Small farm loans are defined as those whose original amounts are
$500,000 or less and were reported as either ``Loans to finance
agricultural production and other loans to farmers'' or ``Loans secured
by farmland'' in Part I of the Call Report [and] or TFR.
    Sec.  ----.42(a)-5: Should institutions collect and report data
about small business and small farm loans that are refinanced or
renewed?
    A5. An institution should collect information about small business
and small farm loans that it refinances or renews as loan originations.
(A refinancing generally occurs when the existing loan obligation or
note is satisfied and a new note is written, while a renewal refers to
an extension of the term of a loan. However, for purposes of small
business and small farm CRA data collection and reporting, it is [no
longer] not necessary to distinguish between the two.)
When reporting small business and small farm data, however, an
institution may only report one origination (including a renewal or
refinancing treated as an origination) per loan per year, unless an
increase in the loan amount is granted. However, a demand loan
that is merely reviewed annually is not reported as a renewal because
the term of the loan has not been extended.
    If an institution increases the amount of a small business or small
farm loan when it extends the term of the loan, it should always report
the amount of the increase as a small business or small farm loan
origination. The institution should report only the amount of the
increase if the original or remaining amount of the loan has already
been reported one time that year. For example, a financial institution
makes a term loan for $25,000; principal payments have resulted in a
present outstanding balance of $15,000. In the next year, the customer
requests an additional $5,000, which is approved, and a new note is
written for $20,000. In this example, the institution should report
both the $5,000 increase and the renewal or refinancing of the $15,000
as originations for that year. These two originations may be reported
together as a single origination of $20,000.
    Sec.  ----.42(a)--6: Does a loan to the ``fishing industry'' come
under the definition of a small farm loan?
    A6. Yes. Instructions for Part I of the Call Report and Schedule SB
of the TFR include loans ``made for the purpose of financing fisheries
and forestries, including loans to commercial fishermen'' as a
component of the definition for ``Loans to finance agricultural
production and other loans to farmers.'' Part II of Schedule RC-C of
the Call Report and Schedule SB of the TFR, which serve as the basis of
the definition for small business and small farm loans in the [revised]
regulation, capture both ``Loans to finance agricultural production and
other loans to farmers'' and ``Loans secured by farmland.''
    Sec.  ----.42(a)--7: How should an institution report a home equity
line of credit, part of which is for home improvement purposes[, but
the predominant] and part of which is for small business
purposes?
    A7. [The] When an institution originates a home equity line
of credit that is for both home improvement and small business
purposes, the institution has the option of reporting the
portion of the home equity line that is for home improvement
purposes as a home improvement loan under HMDA.
[That] Examiners would consider that portion of the
[loan] line [would be considered ]when [examiners]
they evaluate the institution's home mortgage
lending.  When an institution refinances a home equity line of
credit into another home equity line of credit, HMDA reporting
continues to be optional. If the institution opts to report the
refinanced line, the entire amount of the line would be reported as a
refinancing and examiners will consider the entire refinanced line when
they evaluate the institution's home mortgage lending.
    [If] If an institution that has originated a home equity
line of credit for both home improvement and small business purposes
(or if an institution that has refinanced such a line into another
line) chooses not to report a

[[Page 37955]]

home improvement loan (or a refinancing) under HMDA, and if the
line meets the regulatory definition of a ``community development
loan,'' the institution should collect and report information on the
entire line as a community development loan. If the line does not
qualify as a community development loan, the institution has the option
of collecting and maintaining (but not reporting) the entire line of
credit as ``Other Secured Lines/Loans for Purposes of Small Business.''
    Sec.  ----.42(a)--8: When collecting small business and small farm
data for CRA purposes, may an institution collect and report
information about loans to small businesses and small farms located
outside the United States?
    A8. At an institution's option, it may collect data about small
business and small farm loans located outside the United States;
however, it cannot report this data because the CRA data collection
software will not accept data concerning loan locations outside the
United States.
    Sec.  ----.42(a)--9: Is an institution that has no small farm or
small business loans required to report under CRA?
    A9. Each institution subject to data reporting requirements must,
at a minimum, submit a transmittal sheet, definition of its assessment
area(s), and a record of its community development loans. If the
institution does not have community development loans to report, the
record should be sent with ``0'' in the community development loan
composite data fields. An institution that has not purchased or
originated any small business or small farm loans during the reporting
period would not submit the composite loan records for small business
or small farm loans.
    Sec.  ----.42(a)--10: How should an institution collect and report
the location of a loan made to a small business or farm if the borrower
provides an address that consists of a post office box number or a
rural route and box number?
    A10. Prudent banking practices and Bank Secrecy Act
regulations dictate that [an
institution]institutions know the location of
[its]their customers and loan collateral. Further,
Bank Secrecy Act regulations specifically state that a post office box
is not an acceptable address. Therefore, institutions typically
will know the actual location of their borrowers or loan collateral
beyond an address consisting only of a post office box.
    Many borrowers have street addresses in addition to[ post office
box numbers or] rural route and box numbers. Institutions should ask
their borrowers to provide the street address of the main business
facility or farm or the location where the loan proceeds otherwise will
be applied. Moreover, in many cases in which the borrower s address
consists only of a rural route number[ or post office box], the
institution knows the location (i.e., the census tract[ or block
numbering area]) of the borrower or loan collateral. Once the
institution has this information available, it should assign
[a]the census tract[ or block numbering area] to that
location (geocode) and report that information as required under the
regulation.
    [For loans originated or purchased in 1998 or
later]However , if [the]an institution
cannot determine [the]a rural borrower's street address,
and does not know the census tract[ or block numbering area], the
institution should report the borrower's state, county, MSA or
metropolitan division , if applicable, and ``NA,'' for ``not
available,'' in lieu of a census tract[ or block numbering area] code.

Sec.  ----.42(a)(2) Loan amount at origination.

    Sec.  ----.42(a)(2)--1: When an institution purchases a small
business or small farm loan, in whole or in part, which
amount should the institution collect and report--the original amount
of the loan or the amount at purchase?
    A1. When collecting and reporting information on purchased small
business and small farm loans, including loan participations, an
institution collects and reports the amount of the loan at origination,
not at the time of purchase. This is consistent with the Call Report s
and TFR's use of the ``original amount of the loan'' to determine
whether a loan should be reported as a ``loan to a small business'' or
a ``loan to a small farm'' and in which loan size category a loan
should be reported. When assessing the volume of small business and
small farm loan purchases for purposes of evaluating lending test
performance under CRA, however, examiners will evaluate an institution
s activity based on the amounts at purchase.
    Sec.  ----.42(a)(2)--2: How should an institution collect data
about multiple loan originations to the same business?
    A2. If an institution makes multiple originations to the same
business, the loans should be collected and reported as separate
originations rather than combined and reported as they are on the Call
Report or TFR, which reflect loans outstanding, rather than
originations. However, if institutions make multiple originations to
the same business solely to inflate artificially the number or volume
of loans evaluated for CRA lending performance, the agencies may
combine these loans for purposes of evaluation under the CRA.
    Sec.  ----.42(a)(2)--3: How should an institution collect data
pertaining to credit cards issued to small businesses?
    A3. If an institution agrees to issue credit cards to a
[business'] business's employees, all of the credit card
lines opened on a particular date for that single business should be
reported as one small business loan origination rather than reporting
each individual credit card line, assuming the criteria in the ``small
business loan'' definition in the regulation are met. The credit card
program's ``amount at origination'' is the sum of all of the employee/
business credit cards' credit limits opened on a particular date. If
subsequently issued credit cards increase the small business credit
line, the added amount is reported as a new origination.

Sec.  ----.42(a)(3) The loan location.

    Sec.  ----.42(a)(3)--1: Which location should an institution record
if a small business loan's proceeds are used in a variety of locations?
    A1. The institution should record the loan location by either the
location of the small business borrower's
headquarters or the location where the greatest portion of the proceeds
are applied, as indicated by the borrower.

Sec.  ----.42(a)(4) Indicator of gross annual revenue.

    Sec.  ----.42(a)(4)--1: When indicating whether a small business
borrower had gross annual revenues of $1 million or less, upon what
revenues should an institution rely?
    A1. Generally, an institution should rely on the revenues that it
considered in making its credit decision. For example, in the case of
affiliated businesses, such as a parent corporation and its subsidiary,
if the institution considered the revenues of the entity's parent or a
subsidiary corporation of the parent as well, then the institution
would aggregate the revenues of both corporations to determine whether
the revenues are $1 million or less. Alternatively, if the institution
considered the revenues of only the entity to which the loan is
actually extended, the institution should rely solely upon whether
gross annual revenues are above or below $1 million for that entity.
However, if the institution considered and relied on revenues or income
of a cosigner or guarantor that is not an affiliate of the

[[Page 37956]]

borrower, such as a sole proprietor, the institution should not adjust
the borrower s revenues for reporting purposes.
    Sec.  ----.42(a)(4)--2: If an institution that is not exempt from
data collection and reporting does not request or consider revenue
information to make the credit decision regarding a small business or
small farm loan, must the institution collect revenue information in
connection with that loan?
    A2. No. In those instances, the institution should enter the code
indicating ``revenues not known'' on the individual loan portion of the
data collection software or on an internally developed system. Loans
for which the institution did not collect revenue information may not
be included in the loans to businesses and farms with gross annual
revenues of $1 million or less when reporting this data.
    Sec.  ----.42(a)(4)--3: What gross revenue should an institution
use in determining the gross annual revenue of a start-up business?
    A3. The institution should use the actual gross annual revenue to
date (including $0 if the new business has had no revenue to date).
Although a start-up business will provide the institution with pro
forma projected revenue figures, these figures may not accurately
reflect actual gross revenue and, therefore, should not be
used.
    Sec.  ----.42(a)(4)--4: When [collecting and reporting]
indicating the gross annual revenue of small business or small
farm borrowers, do institutions [collect and report] rely
on the gross annual revenue or the adjusted gross annual revenue
of [its] their borrowers?
    A4. Institutions [collect and report] rely on the
gross annual revenue, rather than the adjusted gross annual revenue, of
their small business or small farm borrowers when
indicating the revenue of small business or small farm
borrowers. The purpose of this data collection is to enable
examiners and the public to judge whether the institution is lending to
small businesses and small farms or whether it is only
making small loans to larger businesses and farms.
    The regulation does not require institutions to request or consider
revenue information when making a loan; however, if institutions do
gather this information from their borrowers, the agencies expect them
to collect and [report] rely upon the borrowers' gross
annual revenue for purposes of CRA. The CRA regulations similarly do
not require institutions to verify revenue amounts; thus, institutions
may rely on the gross annual revenue amount provided by borrowers in
the ordinary course of business. If an institution does not collect
gross annual revenue information for its small business and small farm
borrowers, the institution [would not indicate on the CRA data
collection software that the gross annual revenues of the borrower are
$1 million or less] should enter the code ``revenues not
known''. (See Q&A Sec.  ----.42(a)(4)--2.)

Sec.  ----.42(b) Loan information required to be reported.

Sec.  ----.42(b)(1) Small business and small farm loan data.

    Sec.  ----.42(b)(1)--1: For small business and small farm loan
information that is collected and maintained, what data should be
reported?
    A1. Each institution that is not exempt from data collection and
reporting is required to report in machine-readable form annually by
March 1 the following information, aggregated for each census tract[ or
block numbering area] in which the institution originated or purchased
at least one small business or small farm loan during the prior year:
     The number and amount of loans originated or purchased
with original amounts of $100,000 or less;
     The number and amount of loans originated or purchased
with original amounts of more than $100,000 but less than or equal to
$250,000;
     The number and amount of loans originated or purchased
with original amounts of more than $250,000 but not more than $1
million, as to small business loans, or $500,000, as to small farm
loans; and
     To the extent that information is available, the number
and amount of loans to businesses and farms with gross annual revenues
of $1 million or less (using the revenues the institution considered in
making its credit decision).

Sec.  ----.42(b)(2) Community development loan data.

    Sec.  ----.42(b)(2)--1: What information about community
development loans must institutions report?
    A1. Institutions subject to data reporting requirements must report
the aggregate number and amount of community development loans
originated and purchased during the prior calendar year.
    Sec.  ----.42(b)(2)--2: If a loan meets the definition of a home
mortgage, small business, or small farm loan AND qualifies as a
community development loan, where should it be reported? Can FHA, VA
and SBA loans be reported as community development loans?
    A2. Except for multifamily affordable housing loans, which may be
reported by retail institutions both under HMDA as home mortgage loans
and as community development loans, in order to avoid double counting,
retail institutions must report loans that meet the [definitions]
definition of [home mortgage,] ``home mortgage
loan,'' [small business,] ``small business loan,''
or ``small farm [loans] loan'' only in
those respective categories even if they also meet the definition of
``community development [loans.] loan.'' As
a practical matter, this is not a disadvantage for [retail]
institutions evaluated under the lending, investment, and
service tests because any affordable housing mortgage, small
business, small farm, or consumer loan that would otherwise meet the
definition of [a] ``community development
loan'' will be considered elsewhere in the lending test.
Any of these types of loans that occur outside the institution's
assessment area can receive consideration under the borrower
characteristic criteria of the lending test. See Q&A
Sec.  ----.22(b)(2) & (3)--4.
    Limited purpose and wholesale institutions that meet the
size threshold for reporting purposes also must report loans
that meet the definitions of home mortgage, small business, or small
farm loans in those respective categories[; however, they].
However, these institutions must also report any loans from
those categories that meet the regulatory definition of ``community
development [loans] loan'' as community development
loans. There is no double counting because wholesale and limited
purpose institutions are not subject to the lending test and,
therefore, are not evaluated on their level and distribution of home
mortgage, small business, small farm and consumer
loans.
    Sec.  ----.42(b)(2)--3: When the primary purpose of a loan is to
finance an affordable housing project for low- or moderate-income
individuals, but, for example, only 40 percent of the units in question
will actually be occupied by individuals or families with low or
moderate incomes, should the entire loan amount be reported as a
community development loan?
    A3. Yes. As long as the primary purpose of the loan is a community
development purpose, the full amount of the institution's loan should
be included in its reporting of aggregate amounts of community
development lending. However, as noted in Q&A Sec.  --
--.22(b)(4)--1, examiners may make qualitative distinctions among

[[Page 37957]]

community development loans on the basis of the extent to which the
loan advances the community development purpose.
    Sec.  ----.42(b)(2)--4: When an institution purchases a
participation in a community development loan, which amount should the
institution report--the entire amount of the credit originated by the
lead lender or the amount of the participation purchased?
    A4. The institution reports only the amount of the participation
purchased as a community development loan. However, the institution
uses the entire amount of the credit originated by the lead lender to
determine whether the original credit meets the definition of a ``loan
to a small business,'' ``loan to a small farm,'' or ``community
development loan.'' For example, if an institution purchases a $400,000
participation in a business credit that has a community development
purpose, and the entire amount of the credit originated by the lead
lender is over $1 million, the institution would report $400,000 as a
community development loan.
    Sec.  ----.42(b)(2)--5: Should institutions collect and
report data about community development loans that are refinanced or
renewed?
    A5. Yes. Institutions should collect information about community
development loans that they refinance or renew as loan originations.
Community development loan refinancings and renewals are subject to the
reporting limitations that apply to refinancings and renewals of small
business and small farm loans. See Q&A Sec.  ----.42(a)--5.

Sec.  ----.42(b)(3) Home mortgage loans.

    Sec.  ----.42(b)(3)--1: Must institutions that are not required to
collect home mortgage loan data by the HMDA collect home mortgage loan
data for purposes of the CRA?
    A1. No. If an institution is not required to collect home mortgage
loan data by the HMDA, the institution need not collect home mortgage
loan data under the CRA. Examiners will sample these loans to evaluate
the institution's home mortgage lending. If an institution wants to
ensure that examiners consider all of its home mortgage loans, the
institution may collect and maintain data on these loans.

Sec.  ----.42(c) Optional data collection and maintenance.

Sec.  ----.42(c)(1) Consumer loans.

    Sec.  ----.42(c)(1)--1: What are the data requirements regarding
consumer loans?
    A1. There are no data reporting requirements for consumer loans.
Institutions may, however, opt to collect and maintain data on consumer
loans. If an institution chooses to collect information on consumer
loans, it may collect data for one or more of the following categories
of consumer loans: motor vehicle, credit card, home equity, other
secured, and other unsecured. If an institution collects data for loans
in a certain category, it must collect data for all loans originated or
purchased within that category. The institution must maintain these
data separately for each category for which it chooses to collect data.
The data collected and maintained should include for each loan:
     A unique number or alpha-numeric symbol that can be used
to identify the relevant loan file;
     The loan amount at origination or purchase;
     The loan location; and
     The gross annual income of the borrower that the
institution considered in making its credit decision.
    Generally, guidance given with respect to data collection of small
business and small farm loans, including, for example, guidance
regarding collecting loan location data, and whether to collect data in
connection with refinanced or renewed loans, will also apply to
consumer loans.

Sec.  ----.42(c)(1)(iv) Income of borrower.

    Sec.  ----.42(c)(1)(iv)--1: If an institution does not consider
income when making an underwriting decision in connection with a
consumer loan, must it collect income information?
    A1. No. Further, if the institution routinely collects, but does
not verify, a borrower's income when making a credit decision, it need
not verify the income for purposes of data maintenance.
    Sec.  ----.42(c)(1)(iv)--2: May an institution list ``0'' in the
income field on consumer loans made to employees when collecting data
for CRA purposes as the institution would be permitted to do under
HMDA?
    A2. Yes.
    Sec.  ----.42(c)(1)(iv)--3: When collecting the gross annual income
of consumer borrowers, do institutions collect the gross annual income
or the adjusted gross annual income of the borrowers?
    A3. Institutions collect the gross annual income, rather than the
adjusted gross annual income, of consumer borrowers. The purpose of
income data collection in connection with consumer loans is to enable
examiners to determine the distribution, particularly in the
institution's assessment area(s), of the institution's consumer loans,
based on borrower characteristics, including the number and amount of
consumer loans to low-, moderate-, middle-, and upper-income borrowers,
as determined on the basis of gross annual income.
    The regulation does not require institutions to request or consider
income information when making a loan; however, if institutions do
gather this information from their borrowers, the agencies expect them
to collect the borrowers gross annual income for purposes of CRA. The
CRA regulations similarly do not require institutions to verify income
amounts; thus, institutions may rely on the gross annual income amount
provided by borrowers in the ordinary course of business.
    [Sec.  ]Sec. ----.42(c)(1)(iv)-4: Whose income does an institution
collect when a consumer loan is made to more than one borrower?
    A4. An institution that chooses to collect and maintain information
on consumer loans collects the gross annual income of all primary
obligors for consumer loans, to the extent that the institution
considered the income of the obligors when making the decision to
extend credit. Primary obligors include co-applicants and co-borrowers,
including co-signers. An institution does not, however, collect the
income of guarantors on consumer loans, because guarantors are only
secondarily liable for the debt.

Sec. ----.42(c)(2) Other loan data.

    Sec. ----.42(c)(2)-1: Schedule RC-C, Part II of the Call Report
does not allow banks to report loans for commercial and industrial
purposes that are secured by residential real estate, unless the
security interest in the nonfarm residential real estate is taken only
as an abundance of caution. (See Q&A [Sec.  ]Sec. --
--.12([u] v) [& 563e.12(t)]-3.) Loans extended to small
businesses with gross annual revenues of $1 million or less may,
however, be secured by residential real estate. May a bank collect this
information to supplement its small business lending data at the time
of examination?
    A1. Yes. If these loans promote community development, as defined
in the regulation, the bank should collect and report information about
the loans as community development loans. Otherwise, at the bank's
option, it may collect and maintain data concerning loans, purchases,
and lines of credit extended to small businesses and secured by nonfarm
residential real estate for consideration in the CRA

[[Page 37958]]

evaluation of its small business lending. A bank may collect this
information as ``Other Secured Lines/Loans for Purposes of Small
Business'' in the individual loan data. This information should be
maintained at the bank but should not be submitted for central
reporting purposes.
    Sec. ----.42(c)(2)-2: Must an institution collect data on loan
commitments and letters of credit?
    A2. No. Institutions are not required to collect data on loan
commitments and letters of credit. Institutions may, however, provide
for examiner consideration information on letters of credit and
commitments.
    Sec. ----.42(c)(2)-3: Are commercial and consumer leases considered
loans for purposes of CRA data collection?
    A3. Commercial and consumer leases are not considered small
business or small farm loans or consumer loans for purposes of the data
collection requirements in 12 CFR [Sec.  ]----.42(a) & (c)(1). However,
if an institution wishes to collect and maintain data about leases, the
institution may provide this data to examiners as ``other loan data''
under 12 CFR [Sec.  ]----.42(c)(2) for consideration under the lending
test.

Sec. ----.42(d) Data on affiliate lending.

    Sec. ----.42(d)-1: If an institution elects to have an affiliate's
home mortgage lending considered in its CRA evaluation, what data must
the institution make available to examiners?
    A1. If the affiliate is a HMDA reporter, the institution must
identify those loans reported by its affiliate under 12 CFR part 203
(Regulation C, implementing HMDA). At its option, the institution may
[either] provide examiners with either the affiliate's
entire HMDA Disclosure Statement or just those portions covering the
loans in its assessment area(s) that it is electing to consider. If the
affiliate is not required by HMDA to report home mortgage loans, the
institution must provide sufficient data concerning the affiliate's
home mortgage loans for the examiners to apply the performance tests.

Sec. ----.43 Content and availability of public file.

Sec. ----.43(a) Information available to the public.

Sec. ----.43(a)(1) Public comments related to [a bank's] an
institution's CRA performance.

    Sec. ----.43(a)(1)-1: What happens to comments received by the
agencies?
    A1. Comments received by a Federal financial supervisory agency
will be on file at the agency for use by examiners. Those comments are
also available to the public unless they are exempt from disclosure
under the Freedom of Information Act.
    Sec. ----.43(a)(1)--2: Is an institution required to respond to
public comments?
    A2. No. All institutions should review comments and complaints
carefully to determine whether any response or other action is
warranted. A small institution subject to the small institution
performance standards is specifically evaluated on its record of taking
action, if warranted, in response to written complaints about its
performance in helping to meet the credit needs in its assessment
area(s) (12 CFR [Sec.  ] ----.26([a]b)(5)).
For all institutions, responding to comments may help to foster a
dialogue with members of the community or to present relevant
information to an institution's Federal financial supervisory agency.
If an institution responds in writing to a letter in the public file,
the response must also be placed in that file, unless the response
reflects adversely on any person or placing it in the public file
violates a law.

Sec. ----.43(a)(2) CRA performance evaluation.

    Sec. ----.43(a)([1]2)--[3]1: May an
institution include a response to its CRA [Performance Evaluation]
performance evaluation in its public file?
    A[3]1. Yes. However, the format and content of the
evaluation, as transmitted by the supervisory agency, may not be
altered or abridged in any manner. In addition, an institution that
received a less than satisfactory rating during its most recent
examination must 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. See 12 CFR--
--.43(b)(5). The institution must update the description on a
quarterly basis.

Sec. ----.43(b) Additional information available to the public.

Sec. ----.43(b)(1) Institutions other than small institutions.

    Sec. ----.43(b)(1)--1: Must an institution that elects to have
affiliate lending considered include data on this lending in its public
file?
    A1. Yes. The lending data to be contained in an institution's
public file covers the lending of the institution's affiliates, as well
as of the institution itself, considered in the assessment of the
institution's CRA performance. An institution that has elected to have
mortgage loans of an affiliate considered must include either the
affiliate's HMDA Disclosure Statements for the two prior years or the
parts of the Disclosure Statements that relate to the institution's
assessment area(s), at the institution's option.
    Sec. ----.43(b)(1)--2: May an institution retain [the compact disc
provided by the Federal Financial Institution Examination Council that
contains] its CRA [Disclosure Statement] disclosure statement in
electronic format in its public file, rather than printing a
hard copy of the CRA [Disclosure Statement] disclosure
statement for retention in its public file?
    A2. Yes, if the institution can readily print out [from the compact
disc (or a duplicate of the compact disc)] its CRA [Disclosure
Statement for]disclosure statement from an electronic medium
(e.g., CD, DVD, or Internet website) when a consumer [when the
public file is requested] requests the public file. If
the request is at a branch other than the main office or the one
designated branch in each state that holds the complete public file,
the [bank] institution should provide the CRA [Disclosure
Statement] disclosure statement in a paper copy, or in
another format acceptable to the requestor, within 5 calendar days, as
required by 12 CFR [Sec. ]----.43(c)(2)(ii).

Sec. ----.43(c) Location of public information.

    Sec. ----.43(c)--1: What is an institution's ``main office''?
    A1. An institution's main office is the main, home, or principal
office as designated in its charter.
    Sec. ----.43(c)-- 2: May an institution maintain a copy of its
public file on an intranet or the Internet?
    A2. Yes, an institution may keep all or part of its public file on
an intranet or the Internet, provided that the institution maintains
all of the information, either in paper or electronic form, that is
required in Sec. ----.43 of the regulations. An institution that opts
to keep part or all of its public file on an intranet or the Internet
must follow the rules in 12 CFR[Sec.  ]----.43(c)(1) and
(2) as to what information is required to be kept at a main office and
at a branch. The institution also must ensure that the information
required to be maintained at a main office and branch, if kept
electronically, can be readily downloaded and printed for any member of
the public who requests a hard copy of the information.

[[Page 37959]]

Sec. ----.44 Public notice by institutions.

    Sec. ----.44-1: Are there any placement or size requirements for an
institution's public notice?
    A1. The notice must be placed in the institution's public lobby,
but the size and placement may vary. The notice should be placed in a
location and be of a sufficient size that customers can easily see and
read it.

Sec. ----.45--Publication of planned examination schedule.

    Sec. ----.45-1: Where will the agencies publish the planned
examination schedule for the upcoming calendar quarter?
    A1. The agencies may use the Federal Register, a press release, the
Internet, or other existing agency publications for disseminating the
list of the institutions scheduled [to] for CRA examinations during the
upcoming calendar quarter. Interested parties should contact the
appropriate Federal financial supervisory agency for information on how
the agency is publishing the planned examination schedule.
    Sec. ----.45-2: Is inclusion on the list of institutions that are
scheduled to undergo CRA examinations in the next calendar quarter
determinative of whether an institution will be examined in that
quarter?
    A2. No. The agencies attempt to determine as accurately as possible
which institutions will be examined during the upcoming calendar
quarter. However, whether an institution's name appears on the
published list does not conclusively determine whether the institution
will be examined during that quarter. The agencies may need to defer a
planned examination or conduct an unforeseen examination because of
scheduling difficulties or other circumstances.

Appendix A to Part------Ratings

    APPENDIX A to Part------1: Must an institution's performance fit
each aspect of a particular rating profile in order to receive that
rating?
    A1. No. Exceptionally strong performance in some aspects of a
particular rating profile may compensate for weak performance in
others. For example, a retail institution other than an
intermediate small institution that uses non-branch delivery
systems to obtain deposits and to deliver loans may have almost all
of its loans outside the institution's assessment area. Assume that
an examiner, after consideration of performance context and other
applicable regulatory criteria, concludes that the institution has
weak performance under the lending [test] criteria applicable to
lending activity, geographic distribution, and borrower
characteristics within the assessment area. The institution may
compensate for such weak performance by exceptionally strong
performance in community development lending in its assessment area
or a broader statewide or regional area that includes its assessment
area.

Appendix B to Part------CRA Notice

    APPENDIX B to Part------1: What agency information should be
added to the CRA notice form?
    A1. The following information should be added to the form:
    OCC-supervised institutions only: [The] For community
banks, the address of the deputy comptroller of the district
in which the institution is located should be inserted in the
appropriate blank. These addresses can be found at [12 CFR 4.5(a).]
http://www.occ.gov. For banks supervised under the large bank

program, insert ``Large Bank Supervision, 250 E Street, SW.,
Washington, DC 20219-0001.'' For banks supervised under the mid-
size/credit card bank program, insert ``Mid-Size and Credit Card
Bank Supervision, 250 E Street, SW., Washington, DC 20219-
0001.''
    OCC-, FDIC-, and Board-supervised institutions: Officer in
Charge of Supervision is the title of the responsible official at
the appropriate Federal Reserve Bank.
    [Appendix A--Regional Offices of the Bureau of the Census] is
deleted in its entirety.
    End of text of the Interagency Questions and Answers

    Dated: June 26, 2007.
John C. Dugan,
Comptroller of the Currency.


    Dated: June 26, 2007.

    By order of the Board of Governors of the Federal Reserve
System.
Jennifer J. Johnson,
Secretary of the Board.


    Dated at Washington, DC, this 26th day of June, 2007.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.


    Dated: June 26, 2007.

    By the Office of Thrift Supervision.

John M. Reich,
Director.

[FR Doc. 07-3223 Filed 7-10-07; 8:45 am]