§ 228.21 - Evaluation of CRA performance in general.

§ 228.21 Evaluation of CRA performance in general.

(a) Application of performance tests and strategic plans —

(1) Large banks. To evaluate the performance of a large bank, the Board applies the Retail Lending Test in § 228.22, the Retail Services and Products Test in § 228.23, the Community Development Financing Test in § 228.24, and the Community Development Services Test in § 228.25.

(2) Intermediate banks —

(i) In general. To evaluate the performance of an intermediate bank, the Board applies the Retail Lending Test in § 228.22 and either the Intermediate Bank Community Development Test in § 228.30(a)(2) or, at the bank's option, the Community Development Financing Test in § 228.24.

(ii) Intermediate banks evaluated under § 228.24. If an intermediate bank opts to be evaluated pursuant to the Community Development Financing Test in § 228.24, the Board evaluates the intermediate bank for the evaluation period preceding the bank's next CRA examination pursuant to the Community Development Financing Test in § 228.24 and continues evaluations pursuant to this performance test for subsequent evaluation periods until the bank opts out. If an intermediate bank opts out of the Community Development Financing Test in § 228.24, the Board reverts to evaluating the bank pursuant to the Intermediate Bank Community Development Test in § 228.30(a)(2), starting with the evaluation period preceding the bank's next CRA examination.

(iii) Additional consideration. An intermediate bank may request additional consideration pursuant to § 228.30(b).

(3) Small banks —

(i) In general. To evaluate the performance of a small bank, the Board applies the Small Bank Lending Test in § 228.29(a)(2), unless the bank opts to be evaluated pursuant to the Retail Lending Test in § 228.22.

(ii) Small banks evaluated under the Retail Lending Test. If a small bank opts to be evaluated pursuant to the Retail Lending Test in § 228.22, the following applies:

(A) The Board evaluates the small bank using the same provisions used to evaluate intermediate banks pursuant to the Retail Lending Test in § 228.22.

(B) The Board evaluates the small bank for the evaluation period preceding the bank's next CRA examination pursuant to the Retail Lending Test in § 228.22 and continues evaluations under this performance test for subsequent evaluation periods until the bank opts out. If a small bank opts out of the Retail Lending Test in § 228.22, the Board reverts to evaluating the bank pursuant to the Small Bank Lending Test in § 228.29(a)(2), starting with the evaluation period preceding the bank's next CRA examination.

(iii) Additional consideration. A small bank may request additional consideration pursuant to § 228.29(b).

(4) Limited purpose banks —

(i) In general. The Board evaluates a limited purpose bank pursuant to the Community Development Financing Test for Limited Purpose Banks in § 228.26.

(ii) Additional consideration. A limited purpose bank may request additional consideration pursuant to § 228.26(b)(2).

(5) Military banks —

(i) In general. The Board evaluates a military bank pursuant to the applicable performance tests described in paragraph (a) of this section.

(ii) Evaluation approach for military banks operating under § 228.16(d). If a military bank delineates the entire United States and its territories as its sole facility-based assessment area pursuant to § 228.16(d), the Board evaluates the bank exclusively at the institution level based on its performance in its sole facility-based assessment area.

(6) Banks operating under a strategic plan. The Board evaluates the performance of a bank that has an approved strategic plan pursuant to § 228.27.

(b) Loans, investments, services, and products of operations subsidiaries and other affiliates —

(1) In general. In the performance evaluation of a bank, the Board considers the loans, investments, services, and products of a bank's operations subsidiaries and other affiliates, as applicable, as provided in paragraphs (b)(2) and (3) of this section, so long as no other depository institution claims the loan, investment, service, or product for purposes of this part or 12 CFR part 25 or 345.

(2) Loans, investments, services, and products of operations subsidiaries. The Board considers the loans, investment, services, and products of a bank's operations subsidiaries under this part, unless an operations subsidiary is independently subject to the CRA. The bank must collect, maintain, and report data on the loans, investments, services, and products of its operations subsidiaries as provided in § 228.42(c).

(3) Loans, investments, services, and products of other affiliates. The Board considers the loans, investments, services, and products of affiliates of a bank that are not operations subsidiaries, at the bank's option, subject to the following:

(i) The affiliate is not independently subject to the CRA.

(ii) The bank collects, maintains, and reports data on the loans, investments, services, or products of the affiliate as provided in § 228.42(d).

(iii) Pursuant to the Retail Lending Test in § 228.22, if a bank opts to have the Board consider the closed-end home mortgage loans, small business loans, small farm loans, or automobile loans that are originated or purchased by one or more of the bank's affiliates in a particular Retail Lending Test Area, the Board will consider, subject to paragraphs (b)(3)(i) and (ii) of this section, all of the loans in that product line originated or purchased by all of the bank's affiliates in the particular Retail Lending Test Area.

(iv) Pursuant to the Retail Lending Test in § 228.22, if a large bank opts to have the Board consider the closed-end home mortgage loans or small business loans that are originated or purchased by any of the bank's affiliates in any Retail Lending Test Area, the Board will consider, subject to paragraphs (b)(3)(i) and (ii) of this section, the closed-end home mortgage loans or small business loans originated by all of the bank's affiliates in the nationwide area when delineating retail lending assessment areas pursuant to § 228.17(c).

(v) Pursuant to the Community Development Financing Test in § 228.24, the Community Development Financing Test for Limited Purpose Banks in § 228.26, the Intermediate Bank Community Development Test in § 228.30(a)(2), or pursuant to an approved strategic plan in § 228.27, the Board will consider, at the bank's option, community development loans or community development investments that are originated, purchased, refinanced, or renewed by one or more of the bank's affiliates, subject to paragraphs (b)(3)(i) and (ii) of this section.

(c) Community development lending and community development investment by a consortium or a third party. If a bank invests in or participates in a consortium that originates, purchases, refinances, or renews community development loans or community development investments, or if a bank invests in a third party that originates, purchases, refinances, or renews community development loans or community development investments, the Board may consider, at the bank's option, either those loans or investments, subject to the limitations in paragraphs (c)(1) through (3) of this section, or the investment in the consortium or third party.

(1) The bank must collect, maintain, and report the data pertaining to the community development loans and community development investments as provided in § 228.42(e), as applicable;

(2) If the participants or investors choose to allocate community development loans or community development investments among themselves for consideration under this section, no participant or investor may claim a loan origination, loan purchase, or investment for community development consideration if another participant or investor claims the same loan origination, loan purchase, or investment; and

(3) The bank may not claim community development loans or community development investments accounting for more than its percentage share (based on the level of its participation or investment) of the total loans or investments made by the consortium or third party.

(d) Performance context information considered. When applying performance tests and strategic plans pursuant to paragraph (a) of this section, and when determining whether to approve a strategic plan pursuant to § 228.27(h), the Board may consider the following performance context information to the extent that it is not considered as part of the performance tests as provided in paragraph (a) of this section:

(1) Any information regarding a bank's institutional capacity or constraints, including the size and financial condition of the bank, safety and soundness limitations, or any other bank-specific factors that significantly affect the bank's ability to provide retail lending, retail banking services and retail banking products, community development loans, community development investments, or community development services;

(2) Any information regarding the bank's past performance;

(3) Demographic data on income levels and income distribution, nature of housing stock, housing costs, economic climate, or other relevant data;

(4) Any information about retail banking and community development needs and opportunities provided by the bank or other relevant sources, including, but not limited to, members of the community, community organizations, State, local, and tribal governments, and economic development agencies;

(5) Data and information provided by the bank regarding the bank's business strategy and product offerings;

(6) The bank's public file, as provided in § 228.43, including any written comments about the bank's CRA performance submitted to the bank or the Board and the bank's responses to those comments; and

(7) Any other information deemed relevant by the Board.

(e) Conclusions and ratings —

(1) Conclusions. The Board assigns conclusions to a large bank's or limited purpose bank's performance on the applicable tests described in paragraph (a) of this section pursuant to § 228.28 and appendix C to this part. The Board assigns conclusions to a small bank's or intermediate bank's performance on the applicable tests described in paragraph (a) of this section pursuant to § 228.28 and appendices C and E to this part. The Board assigns conclusions to a bank that has an approved strategic plan pursuant to § 228.28 and paragraph g of appendix C to this part.

(2) Ratings. The Board assigns an overall CRA performance rating to a bank in each State or multistate MSA, as applicable, and for the institution pursuant to § 228.28 and appendices D and E to this part.

(f) Safe and sound operations. The CRA and this part do not require a bank to originate or purchase loans or investments or to provide services that are inconsistent with safe and sound banking practices, including underwriting standards. Banks are permitted to develop and apply flexible underwriting standards for loans that benefit low- or moderate-income individuals, small businesses or small farms, and low- or moderate-income census tracts, only if consistent with safe and sound operations.