Code of Federal Regulations (Last Updated: October 10, 2024) |
Title 12 - Banks and Banking |
Chapter III—Federal Deposit Insurance Corporation |
SubChapter B—Regulations and Statements of General Policy |
Part 345 - Community Reinvestment |
Subpart C - Records, Reporting, and Disclosure Requirements |
§ 345.26 - Limited purpose banks.
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§ 345.26 Limited purpose banks.
(a) Bank request for designation as a limited purpose bank. To receive a designation as a limited purpose bank, a bank must file a written request with the FDIC at least 90 days prior to the proposed effective date of the designation. If the FDIC approves the designation, it remains in effect until the bank requests revocation of the designation or until one year after the FDIC notifies a limited purpose bank that the FDIC has revoked the designation on the FDIC's own initiative.
(b) Performance evaluation —
(1) In general. To evaluate a limited purpose bank, the FDIC applies the Community Development Financing Test for Limited Purpose Banks as described in paragraphs (c) through (f) of this section.
(2) Additional consideration —
(i) Community development services. The FDIC may adjust a limited purpose bank's institution rating from “Satisfactory” to “Outstanding” where a bank requests and receives additional consideration for services that would qualify under the Community Development Services Test in § 345.25.
(ii) Additional consideration for low-cost education loans. A limited purpose bank may request and receive additional consideration at the institution level for providing low-cost education loans to low-income borrowers pursuant to 12 U.S.C. 2903(d), regardless of the limited purpose bank's overall institution rating.
(c) Community Development Financing Test for Limited Purpose Banks —
(1) In general. Pursuant to § 345.21, the Community Development Financing Test for Limited Purpose Banks evaluates a limited purpose bank's record of helping to meet the credit needs of its entire community through community development loans and community development investments (i.e., the bank's community development financing performance).
(2) Allocation. The FDIC considers community development loans and community development investments allocated pursuant to paragraph I.b of appendix B to this part.
(d) Facility-based assessment area evaluation. The FDIC evaluates a limited purpose bank's community development financing performance in a facility-based assessment area and assigns a conclusion in the facility-based assessment area based on the FDIC's:
(1) Consideration of the dollar volume of the limited purpose bank's community development loans and community development investments that benefit or serve the facility-based assessment area; and
(2) A review of the impact and responsiveness of the limited purpose bank's community development loans and community development investments that benefit or serve a facility-based assessment area, as provided in § 345.15.
(e) State or multistate MSA evaluation. The FDIC evaluates a limited purpose bank's community development financing performance in each State or multistate MSA, as applicable pursuant to §§ 345.19 and 345.28(c), and assigns a conclusion for the bank's performance in the State or multistate MSA based on the FDIC's consideration of the following two components:
(1) Component one—facility-based assessment area performance conclusions in a State or multistate MSA. A limited purpose bank's community development financing performance in its facility-based assessment areas in the State or multistate MSA; and
(2) Component two—State or multistate MSA performance. The dollar volume of the limited purpose bank's community development loans and community development investments that benefit or serve the State or multistate MSA and a review of the impact and responsiveness of those loans and investments, as provided in § 345.15.
(f) Nationwide area evaluation. The FDIC evaluates a limited purpose bank's community development financing performance in the nationwide area, pursuant to § 345.19, and assigns a conclusion for the institution based on the FDIC's consideration of the following two components:
(1) Component one—facility-based assessment area performance. The limited purpose bank's community development financing performance in all of its facility-based assessment areas; and
(2) Component two—nationwide area performance. The limited purpose bank's community development financing performance in the nationwide area based on the following metrics and benchmarks in paragraphs (f)(2)(i) through (iv) of this section and a review of the impact and responsiveness of the bank's community development loans and community development investments in paragraph (f)(2)(v) of this section.
(i) Limited Purpose Bank Community Development Financing Metric. The Limited Purpose Bank Community Development Financing Metric measures the dollar volume of a bank's community development loans and community development investments that benefit or serve all or part of the nationwide area compared to the bank's assets calculated pursuant to paragraph III.a of appendix B to this part.
(ii) Community Development Financing Benchmarks. The FDIC compares the Limited Purpose Bank Community Development Financing Metric to the following benchmarks:
(A) Nationwide Limited Purpose Bank Community Development Financing Benchmark. The Nationwide Limited Purpose Bank Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments of depository institutions designated as limited purpose banks or savings associations pursuant to 12 CFR 25.26(a) or designated as limited purpose banks pursuant to paragraph (a) of this section or 12 CFR 228.26(a) reported pursuant to § 345.42(b) or 12 CFR 25.42(b) or 228.42(b) that benefit and serve all or part of the nationwide area compared to assets for those depository institutions, calculated pursuant to paragraph III.b of appendix B to this part; and
(B) Nationwide Asset-Based Community Development Financing Benchmark. The Nationwide Asset-Based Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve all or part of the nationwide area of all depository institutions that reported pursuant to § 345.42(b) or 12 CFR 25.42(b) or 228.42(b) compared to assets for those depository institutions, calculated pursuant to paragraph III.c of appendix B to this part.
(iii) Limited Purpose Bank Community Development Investment Metric. For a limited purpose bank that had assets greater than $10 billion as of December 31 in both of the prior two calendar years, the Limited Purpose Bank Community Development Investment Metric measures the dollar volume of the bank's community development investments that benefit or serve all or part of the nationwide area, excluding mortgage-backed securities, compared to the bank's assets, calculated pursuant to paragraph III.d of appendix B to this part.
(iv) Nationwide Asset-Based Community Development Investment Benchmark.
(A) For a limited purpose bank that had assets greater than $10 billion as of December 31 in both of the prior two calendar years, the FDIC compares the Limited Purpose Bank Community Development Investment Metric to the Nationwide Asset-Based Community Development Investment Benchmark. This comparison may only contribute positively to the bank's Community Development Financing Test for Limited Purpose Banks conclusion for the institution.
(B) The Nationwide Asset-Based Community Development Investment Benchmark measures the dollar volume of community development investments that benefit or serve all or part of the nationwide area, excluding mortgage-backed securities, of all depository institutions that had assets greater than $10 billion as of December 31 in both of the prior two calendar years, compared to assets for those depository institutions, calculated pursuant to paragraph III.e of appendix B to this part.
(v) Impact and responsiveness review. The FDIC reviews the impact and responsiveness of the bank's community development loans and community development investments that benefit or serve the nationwide area, as provided in § 345.15.
(g) Community Development Financing Test for Limited Purpose Banks performance conclusions and ratings —
(1) Conclusions. Pursuant to § 345.28 and appendix C to this part, the FDIC assigns conclusions for a limited purpose bank's Community Development Financing Test for Limited Purpose Banks performance in each facility-based assessment area, each State or multistate MSA, as applicable, and for the institution. In assigning conclusions under this performance test, the FDIC may consider performance context information as provided in § 345.21(d).
(2) Ratings. Pursuant to § 345.28 and appendix D to this part, the FDIC incorporates a limited purpose bank's Community Development Financing Test for Limited Purpose Banks conclusions into its State or multistate MSA ratings, as applicable, and its institution rating.