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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Compliance & CRA Examination Guidance

CRA & New Markets Tax Credit

The New Markets Tax Credit (NMTC) was created through the Community Renewal Tax Relief Act of 2000. By making an equity investment in an eligible "community development entity" (CDE), individual and corporate investors can receive a New Markets Tax Credit (NMTC) for a significant percentage of the investment.

Almost all businesses located in low- or moderate-income areas, having a substantial connection to these areas, could qualify for loans or equity investments made by a NMTC eligible CDE. Therefore, during CRA examinations, FDIC examiners will presume that any loan to or investment in a NMTC eligible CDE promotes economic and community development.

FDIC Examination Procedures for "Low-Risk" Institutions

Many institutions exhibit little or no discrimination risk. Typically, these institutions are stable community banks that are often located in suburban or rural areas where the demographics show a very low percentage of minority residents. These institutions usually offer standard products, and many of them are predominantly commercial or agricultural lenders. There is often the possibility of conducting a comparative analysis on the basis of gender. However, in some cases it may not be possible to conduct a comparative analysis on the basis of race, national origin, or gender that meets the minimum numbers of the sample size tables for either underwriting or terms and conditions. In other cases, the only possible comparative analysis may have been conducted in the previous examination with no concerns identified, and the lending policies and staff implementing them have not changed.

In such cases, there is no risk sufficient to warrant the establishment of a focal point for the on-site examination. The examiner shall prepare a written explanation of why no comparative analysis is feasible or why the Corporation should rely on a comparative analysis conducted in a previous examination. If the examiner obtains the documented concurrence of the Field Office Supervisor, a comparative analysis is not required.

Note, however, that a review of underwriting and pricing policies should be conducted even when no comparative analysis is possible, unless previous examinations have established that such policies do not contain provisions that are discriminatory on their face.

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