[Code of Federal Regulations] [Title 12, Volume 1] [Revised as of January 1, 2008] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR25.21] [Page 309-310] TITLE 12--BANKS AND BANKING CHAPTER I--COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY PART 25_COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT PRODUCTION REGULATIONS--Table of Contents Subpart B_Standards for Assessing Performance Sec. 25.21 Performance tests, standards, and ratings, in general. Source: 60 FR 22180, May 4, 1995, unless otherwise noted. (a) Performance tests and standards. The OCC assesses the CRA performance of a bank in an examination as follows: (1) Lending, investment, and service tests. The OCC applies the lending, investment, and service tests, as provided in Sec. Sec. 25.22 through 25.24, in evaluating the performance of a bank, except as provided in paragraphs (a)(2), (a)(3), and (a)(4) of this section. (2) Community development test for wholesale or limited purpose banks. The OCC applies the community development test for a wholesale or limited purpose bank, as provided in Sec. 25.25, except as provided in paragraph (a)(4) of this section. (3) Small bank performance standards. The OCC applies the small bank performance standards as provided in Sec. 25.26 in evaluating the performance of a small bank or a bank that was a small bank during the prior calendar year, unless the bank elects to be assessed as provided in paragraphs (a)(1), (a)(2), or (a)(4) of this section. The bank 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 under Sec. 25.42. (4) Strategic plan. The OCC evaluates the performance of a bank under a strategic plan if the bank submits, and the OCC approves, a strategic plan as provided in Sec. 25.27. (b) Performance context. The OCC 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 assessment area(s); (2) Any information about lending, investment, and service opportunities in the bank's assessment area(s) maintained by the bank or obtained from community organizations, state, local, and tribal governments, economic development agencies, or other sources; (3) The bank's product offerings and business strategy as determined from data provided by the bank; (4) Institutional capacity and constraints, including the size and financial condition of the bank, the economic climate (national, regional, and local), safety and soundness limitations, and any other factors that significantly affect the bank's ability to provide lending, investments, or services in its assessment area(s); (5) The bank's past performance and the performance of similarly situated lenders; (6) The bank's public file, as described in Sec. 25.43, and any written comments about the bank's CRA performance submitted to the bank or the OCC; and (7) Any other information deemed relevant by the OCC. [[Page 310]] (c) Assigned ratings. The OCC assigns to a bank one of the following four ratings pursuant to Sec. 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 OCC reflects the bank'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. (d) Safe and sound operations. This part and the CRA do not require a bank to make loans or investments or to provide services that are inconsistent with safe and sound operations. To the contrary, the OCC anticipates banks can meet the standards of this part with safe and sound loans, investments, and services on which the banks expect to make a profit. Banks 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.