The Community Reinvestment Act (CRA) is intended to encourage depository institutions help meet the credit needs of communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe sound banking operations. It was enacted by Congress 1977 (12 USC 2901) implemented Regulations 12 CFR Parts 25, 228, 345, 563e. were revised 1995 2005.

The CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. is taken into account considering an application for deposit facilities, including mergers and acquisitions. examinations are conducted by federal agencies responsible supervising institutions: Board Governors Reserve System (FRB), Insurance Corporation (FDIC), Office Comptroller Currency (OCC), Thrift Supervision (OTS).

The agencies, through the FFIEC, have established interagency examination procedures for following types of institutions: Small Institutions, Intermediate Large Retail Limited Purpose and Wholesale Institutions under Strategic Plans. five different correspond to alternative evaluation methods provided in CRA regulations are designed respond basic differences institutions’ structures operations. All reflect intent regulation establish performance-based examinations that complete accurate but, maximum extent possible, mitigate compliance burden institutions. There also instructions writing public evaluations; template each institution type is Section XII.

Small Institutions have a streamlined assessment method. The regulations contain only five performance criteria under the small bank lending test:

1. The institution’s loan-to-deposit ratio adjusted for seasonal variation and, as appropriate, other lending related activities such as secondary market participation, community development loans or qualified investments;
2. The percentage of loans and other lending-related activities located in the institution’s assessment area(s);
3. The distribution of lending among borrowers of different income levels and businesses and farms of different sizes;
4. The distribution of lending among geographies of different income levels; and
5. The institution’s record of taking action, if warranted, in response to written complaints about its CRA performance.

Small institutions are eligible for a rating of Outstanding, as well as Satisfactory. An examiner may conclude that an institution’s performance so exceeds the standards for a Satisfactory rating under the five core criteria that it merits a rating of Outstanding. In addition, at the institution’s option, the examiner will consider the institution’s performance in making qualified investments and in providing services that enhance credit availability in its assessment area(s) in order to determine whether the institution merits an Outstanding rating.

In carrying out their examination responsibilities, examiners should exercise judgment and common sense in deciding how much material to review what steps are necessary reach an accurate conclusion. For example, if institution’s assessment area(s) is comprised of only a few homogenous geographies, geographic analysis loans within the may be unnecessary. Or, institution has done determine where, whom, it making its assist itself business efforts, able validate then use rather than conduct detailed own. other words, when evaluating performance criteria, always consider available, reliable information.

Similarly, if an institution’s loan-to-deposit ratio appears low, the examination procedures ask the examiner to evaluate the institution’s lending-related activities, such as loan sales and community development lending and investments to determine if they materially supplement its lending performance as reflected in its loan-to-deposit ratio. However, such an analysis may not be necessary or a less extensive analysis may be sufficient if the loan-to-deposit ratio is high.

Examination Procedures for Small Institutions Examination Scope

1. For institutions with more than one assessment area, identify assessment areas for full scope review. In making those selections, review prior CRA performance evaluations, available community contact materials, and reported lending data and demographic data on each assessment area. Consider factors such as:
1. The lending opportunities in the different assessment areas;
2. The level of the institution’s lending activity in the different assessment areas, including low- and moderate-income areas, designated disaster areas, or distressed or underserved nonmetropolitan middleincome geographies designated by the Agencies ² based on (a) rates of poverty, unemployment, and population loss, or (b) population size, density, and dispersion; ³
3. The number of other institutions in the different assessment areas and the importance of the institution under examination in serving the different areas, particularly any areas with relatively few other providers of financial services;
4. The existence of apparent anomalies in the reported HMDA data for any particular assessment area(s);
5. The length of time since the assessment area(s) was last examined using a full scope review;
6. The institution’s prior CRA performance in different assessment areas;
7. Examiners’ knowledge of the same or similar assessment areas; and
8. Comments from the public regarding the institution’s CRA performance.
2. For interstate institutions, a rating must be assigned for each state where the institution has a branch and for each multi-state metropolitan statistical area (MSA) or metropolitan division (MD) where the institution has branches in two or more states that comprise that multistate MSA/MD. Select one or more assessment areas in each state for examination using these procedures.

1. Review standardized worksheets and other agency information sources to obtain relevant demographic, economic and loan data, to the extent available, for each assessment area under review.
2. Obtain for review the Consolidated Reports of Condition (Call Reports), Uniform Bank Performance Reports (UBPR), annual reports, supervisory reports, and prior CRA evaluations of the institution under examination. Review financial information and the prior CRA evaluations of institutions of similar size that serve the same or similar assessment area(s).
3. Consider any information the institution may provide on its local community and economy, its business strategy, its lending capacity, or that otherwise assists in the evaluation of the institution.
4. Review community contact forms prepared by the regulatory agencies to obtain information that assists in the evaluation of the institution. Contact local community, governmental or economic development representatives to update or supplement this information. Refer to the Community Contact Procedures for more detail.
5. Review the institution’s public file for any comments received by the institution or the agency since the last CRA performance evaluation for information that assists in the evaluation of the institution.
6. Document the performance context information gathered for use in evaluating the institution’s performance.

Assessment Area

1. Review the institution’s stated assessment area(s) to ensure that it:
   1. Consists of one or more MSAs/MDs or contiguous political subdivisions (e.g., counties, cities, or towns);
   2. Includes the geographies where the institution has its main office, branches, and deposit-taking ATMs, as well as the surrounding geographies in which the institution originated or purchased a substantial portion of its loans;
   3. Consists only of whole census tracts;
   4. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is located in a multi-state MSA/MD;
   5. Does not reflect illegal discrimination; and
   6. Does not arbitrarily exclude any low- or moderateincome area(s), taking into account the institution’s size, branching structure, and financial condition.
2. If an institution’s assessment area(s) does not coincide with the boundaries of an MSA/MD or political subdivision(s), assess whether the adjustments to the boundaries were made because the assessment area would otherwise be too large for the institution to reasonably serve, have an unusual configuration, or include significant geographic barriers.
3. If the assessment area(s) fails to comply with the applicable criteria described above, develop, based on discussions with management, a revised assessment area(s) that complies with the criteria. Use this assessment area(s) to evaluate the institution’s performance, but do not otherwise consider the revision in determining the institution’s rating.

Performance Criteria
Loan-to-Deposit Analysis

1. From data contained in Call Reports or UBPRs, calculate the average loan-to-deposit ratio since the last examination by adding the quarterly loan-to-deposit ratios and dividing by the number of quarters.
2. Evaluate whether the institution’s average loan-todeposit ratio is reasonable in light of information from the performance context including, as applicable, the institution’s capacity to lend, the capacity of other similarly-situated institutions to lend in the assessment area(s), demographic and economic factors present in the assessment area(s), and the lending opportunities available in the institution’s assessment area(s).
3. If the loan to deposit ratio does not appear reasonable in light of the performance context, consider the number and the dollar volume of loans sold to the secondary market, or the innovativeness or complexity of community development loans and qualified investments to assess the extent to which these activities compensate for a low loan-to-deposit ratio or supplement the institution’s lending performance as reflected in its loan-to-deposit ratio.
4. Discuss the preliminary findings in this section with management.
5. Summarize in workpapers conclusions regarding the institution’s loan-to-deposit ratio.

Comparison of Credit Extended Inside and Outside of the Assessment Area(s)

1. If available, review HMDA data, automated loan reports, and any other reports that may have been generated by the institution to analyze the extent of lending inside and outside of the assessment area(s). If a report generated by the institution is used, test the accuracy of the output.
2. If loan reports or data analyzing lending inside and outside of the assessment area(s) are not available or comprehensive, or if their accuracy cannot be verified, use sampling guidelines to select a sample of loans originated, purchased or committed to calculate the percentage (by number and dollar amount) located within the assessment area(s).
3. If the percentage of loans or other lending related activities in the assessment area is less than a majority, then the institution does not meet the standards for "Satisfactory" under this performance criterion. In this case, consider information from the performance context, such as information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the institution.
4. Discuss the preliminary findings in this section with management.
5. Summarize in workpapers conclusions regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s).

Distribution of Credit Within the Assessment Area(s)

1. Determine whether the number and income distribution of geographies in the assessment area(s) are sufficient for a meaningful analysis of the geographic distribution of the institution’s loans in its assessment area(s).
2. If a geographic distribution analysis of the institution’s loans would be meaningful and the necessary geographic information (street address or census tract numbers) is collected by the institution in the ordinary course of its business, determine the distribution of the institution’s loans in its assessment area(s) among low-, moderate-, middle-, and upper-income geographies. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the assessment area(s).
3. If a geographic analysis of loans in the assessment area(s) is performed, identify groups of geographies, by income categories, in which there is little or no loan penetration. Note that institutions are not expected to lend in every geography.
4. To the extent information about borrower income (individuals) or revenues (businesses) is collected by the institution in the ordinary course of its business, determine the distribution of loans in the assessment area(s) by borrower income and by business revenues. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the assessment area(s).
5. Identify categories of borrowers by income or business revenue for which there is little or no loan penetration.
6. If an analysis of the distribution of loans among geographies of different income levels would not be meaningful (e.g., very few geographies in the assessment area(s)) or an analysis of lending to borrowers of different income or revenues could not be performed (e.g., income data are not collected for certain loans), consider possible proxies to use for analysis of the institution’s distribution of credit. Possibilities include analyzing geographic distribution by street address rather than geography (if data are available and the analysis would be meaningful) or analyzing the distribution by loan size as a proxy for income or revenues of the borrower.
7. If there are categories of low penetration, form conclusions about the reasons for that low penetration. Consider available information from the performance context, including:
   
   1. Information about the institution’s size, branch network, financial condition, supervisory restrictions (if any) and prior CRA record;
   2. Information from discussions with management, loan officers, and members of the community;
   3. Information about economic conditions, particularly in the assessment area(s);
   4. Information about demographic or other characteristics of particular geographies that could affect loan demand, such as the existence of a prison or college; and
   5. Information about other lenders serving the same or similar assessment area(s).
8. Discuss the preliminary findings in this section with management.
9. Summarize in workpapers conclusions concerning the geographic distribution of loans and the distribution of loans by borrower characteristics in the institution’s assessment area(s).

Review of Complaints

1. Review all complaints relating to the institution’s CRA performance received by the institution (these should all be contained in the institution’s public file) and those that were received by its supervisory agency.
2. If there were any complaints, evaluate the institution’s record of taking action, if warranted, in response to written complaints about its CRA performance.
3. If there were any complaints, discuss the preliminary findings in this section with management.
4. If there were any complaints, summarize in workpapers conclusions regarding the institution’s record of taking action, if warranted, in response to written complaints about its CRA performance. Include the total number of complaints and resolutions with examples that illustrate the nature, responsiveness to, and resolution of, the complaints.

Investments and Services (at the institution’s option to enhance a "Satisfactory" rating)

1. If the institution chooses, review its performance in making qualified investments and providing branches and other services and delivery systems that enhance credit availability in its assessment area(s). Performance with respect to qualified investments and services may be used to enhance an institution’s overall rating of "Satisfactory", but cannot be used to lower a rating that otherwise would have been assigned.
2. To evaluate the institution’s performance in making qualified investments that enhance credit availability in its assessment area(s), consider:
   1. The dollar amount of qualified investments, by type and location;
   2. The impact of those investments on the institution’s assessment area(s); and
   3. The innovativeness or complexity of the investments.
3. To evaluate the institution’s record of providing branches and other services and delivery systems that enhance credit availability in its assessment area(s), consider:
   1. The number of branches and ATMs located in the institution’s assessment area(s);
   2. The number of branches and ATMs located within, or that are readily accessible to, low- and moderateincome geographies compared to those located in, or readily accessible to middle- and upper-income geographies;
   3. The type and level of service(s) offered at branches and ATMs and alternative delivery systems; and
   4. The institution’s record of opening and closing branches.

Ratings

1. Group the analyses of the assessment areas examined by MSA ⁴ and nonmetropolitan areas within each state where the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the assessment areas that are in that MSA.
2. Summarize conclusions about the institution’s performance in each MSA and the nonmetropolitan portion of each state in which an assessment area received a full scope review. If two or more assessment areas in an MSA or in the nonmetropolitan portion of a state received full scope reviews, weigh the different assessment areas considering such factors as:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending opportunities in each;
3. The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
3. For assessment areas in MSAs and nonmetropolitan areas that were not examined using the full scope procedures, consider facts and data related to the institution’s lending to ensure that performance in those assessment areas is not inconsistent with the conclusions based on the assessment areas that received full scope examinations.
4. For institutions operating in only one multi-state MSA or one state, assign one of the four preliminary ratings -- "Satisfactory", "Outstanding", "Needs to Improve", and "Substantial Noncompliance" -- in accordance with step 6 below. To determine the relative significance of each MSA and nonmetropolitan area to the institution’s preliminary rating, consider:
   1. The significance of the institution’s activities in each compared to the institution’s overall activities;
   2. The lending opportunities in each;
   3. The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
   4. Demographic and economic conditions in each.
5. For other institutions, assign one of the four preliminary ratings – "Satisfactory", "Outstanding", "Needs to Improve", and "Substantial Noncompliance" -- for each state in which the institution has at least one branch and for each multi-state MSA in which the institution has branches in two or more states in accordance with step #6 below. To determine the relative significance of each MSA and the nonmetropolitan area on the institution’s preliminary state rating, consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending opportunities in each;
3. The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
6. Consult the Small Institution Ratings Matrix and information in workpapers to assign a preliminary rating of:
1. "Satisfactory" if the institution’s performance meets each of the standards for a satisfactory rating or if exceptionally strong performance with respect to some of the standards compensates for weak performance in others;
2. "Needs to Improve" or "Substantial Noncompliance" if the institution’s performance fails to meet the standards for "Satisfactory" performance. Whether a rating is "Needs to Improve" or "Substantial Noncompliance" will depend upon the degree to which the institution’s performance has failed to meet the standards for a "Satisfactory" rating; or
3. "Outstanding" if the institution meets the rating descriptions and standards for "Satisfactory" for each of the five core criteria, and materially exceeds the standards for "Satisfactory" in some or all of the criteria to the extent that an outstanding rating is warranted, or if the institution’s performance with respect to the five core criteria generally exceeds "Satisfactory" and its performance in making qualified investments and providing branches and other services and delivery systems in the assessment area(s) supplement its performance under the five core criteria sufficiently to warrant an overall rating of "Outstanding".
7. For an institution with branches in more than one state or multi-state MSA, assign a preliminary rating to the institution as a whole taking into account the institution’s record in different states or multi-state MSAs by considering:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending opportunities in each;
3. The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
8. Review the results of the most recent compliance examination and determine whether evidence of discriminatory or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s overall CRA rating or, if applicable, its CRA rating in any state or multi-state MSA. ⁵
If evidence of discrimination or other illegal credit practices in any geography by the institution, or in any assessment area by any affiliate whose loans have been considered as part of the institution’s lending performance, was found, consider:
1. The nature, extent, and strength of the evidence of the practices;
2. The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
3. Any corrective action the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
4. Any other relevant information.
9. Assign a final rating for the institution as a whole and, if applicable, each state in which the institution has at least one branch and each multi-state MSA in which it has branches in two or more states, considering:
1. The institution’s preliminary rating; and
2. Any evidence of discriminatory or other illegal credit practices (see #8 above).
10. Discuss conclusions with management.
11. Write an evaluation of the institution’s performance for the examination report and the public evaluation.
12. Prepare recommendations for a supervisory strategy and for matters that require attention or follow-up activities.

Public File Checklist

1. There is no need to review each branch or each complete public file during every examination. In determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file requirements, and any other relevant information.
2. In any review of the public file undertaken, determine, as needed, whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each state, and the public file available in the main office and in a branch in each state contains:
1. All written comments from the public relating to the institution’s CRA performance and responses to them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
2. The institution’s most recent CRA Public Performance Evaluation;
3. A map of each assessment area showing its boundaries and, on the map or in a separate list, the geographies contained within the assessment area;
4. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, and their street addresses and geographies;
5. The HMDA Disclosure Statement for the prior two calendar years, if applicable;
6. The institution’s loan-to-deposit ratio for each quarter of the prior calendar year;
7. A quarterly report of the institution’s efforts to improve its record if it received a less than satisfactory rating during its most recent CRA examination; and
8. A list of services (loan and deposit products and transaction fees generally offered, and hours of operation at the institution’s branches), including a description of any material differences in the availability or cost of services among locations.
3. In any branch review undertaken, determine whether the branch provides the most recent public evaluation and a list of services available at the branch or a description of material differences from the services generally available at the institution’s other branches.

Public Notice
Determine that the appropriate CRA public notice is displayed as required by § 345.44.

CRA Ratings Matrix — Small Institutions
Characteristic	Outstanding	Satisfactory	Needs to Improve	Substantial Noncompliance
Loan-to-Deposit Ratio	The loan-to-deposit ratio is more than reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.	The loan-to-deposit ratio is reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.	The loan-to-deposit ratio is less than reasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.	The loan-to-deposit ratio is unreasonable (considering seasonal variations and taking into account lending related activities) given the institution’s size, financial condition, and assessment area credit needs.
Assessment Area(s) Concentration	A substantial majority of loans and other lending related activities are in the institution’s assessment area(s).	A majority of loans and other lending related activities are in the institution’s assessment area(s).	A majority of loans and other lending related activities are outside the institution’s assessment area(s)	A substantial majority of loans and other lending related activities are outside the institution’s assessment area(s)
Geographic Distribution of Loans	The geographic distribution of loans reflects excellent dispersion throughout the assessment area(s).	The geographic distribution of loans reflects reasonable dispersion throughout the assessment area(s).	The geographic distribution of loans reflects poor dispersion throughout the assessment area(s).	The geographic distribution of loans reflects very poor dispersion throughout the assessment area(s).
Borrower’s Profile	The distribution of borrowers reflects, given the demographics of the assessment area(s), excellent penetration among individuals of different income levels (including low- and moderate-income) and businesses of different sizes.	The distribution of borrowers reflects, given the demographics of the assessment area(s), reasonable penetration among individuals of different income levels (including low- and moderate-income) and businesses of different sizes.	The distribution of borrowers reflects, given the demographics of the assessment area(s), poor penetration among individuals of different income levels (including low- and moderate-income) and businesses of different sizes.	The distribution of borrowers reflects, given the demographics of the assessment area(s), very poor penetration among individuals of different income levels (including low- and moderate-income) and businesses of different sizes.
Response to Substantiated Complaints	The institution has taken noteworthy, creative action in response to substantiated complaints about its performance in meeting assessment area credit needs.	The institution has taken appropriate action in response to substantiate complaints about its performance in meeting assessment area credit needs.	The institution has taken inadequate action in response to substantiated complaints about its performance in meeting assessment area credit needs.	The institution is unresponsive to substantiated complaints about its performance in meeting assessment area credit needs.
Investments	The institution’s investment record enhances credit availability in its assessment area.	N/A	N/A	N/A
Services	The institution’s record of providing branches, ATMs, loan production offices, and/or other services and delivery systems enhances credit availability in its assessment area(s).	N/A	N/A	N/A

On July 19, 2005, the FDIC, FRB, and OCC jointly approved amendments to the CRA regulations which took effect on September 1, 2005. Among the revisions to the regulations, "intermediate small banks" are defined under §345.12 (u) as small banks with assets of at least $250 million as of December 31 of both of the prior two calendar years and less than $1 billion as of December 31 of either of the prior two calendar years (these asset figures may be adjusted annually). These banks are evaluated under two tests: the small bank lending test and a community development test.

Intermediate small institutions are not required to collect and report CRA loan data for small business, small farm, and community development loans. Nevertheless, the CRA regulations continue to allow small institutions, including intermediate small institutions, to opt for an evaluation under the (large bank) lending, investment, and service tests, provided the data is collected and reported.

To evaluate the distribution of loans under intermediate small bank procedures, examiners should review loan files, bank reports, or any other information or analyses a bank may provide. To evaluate community development loans, investments, and services under the intermediate small bank community development test, examiners will review (1) any information a bank may provide, including the results of any assessment of community development needs or opportunities if conducted by the bank, and (2) performance context information obtained by examiners from community, government, civic or other sources.

Intermediate Small Institution Examination Procedures
Examination Scope
For institutions (interstate and intrastate) with more than one assessment area, identify assessment areas for a full scope review. A full scope review is accomplished when examiners complete all of the procedures for an assessment area. For interstate institutions, a minimum of one assessment area from each state, and a minimum of one assessment area from each multistate MSA/MD, must be reviewed using the full scope examination procedures.

1. To identify assessment areas for full scope review, review prior CRA performance evaluations, available community contact materials, and reported lending data and demographic data on each assessment area. Consider factors such as:
1. The retail lending and community development opportunities in the different assessment areas, particularly areas where the need for credit and community development activities is significant;
2. The level of the institution’s activity in the different assessment areas, including in low- and moderateincome areas, designated disaster areas, or distressed or underserved non-metropolitan middle-income geographies designated by the Agencies ⁶ based on (a) rates of poverty, unemployment, and population loss or (b) population size, density, and dispersion; ⁷
3. The number of other institutions in the different assessment areas and the importance of the institution under examination in serving the different areas, particularly any areas with relatively few other providers of financial services;
4. The existence of apparent anomalies in the reported data for any particular assessment area(s);
5. The length of time since the assessment area(s) was last examined using a full scope review;
6. The institution’s prior CRA performance in different assessment areas;
7. Examiners’ knowledge of the same or similar assessment areas; and
8. Comments from the public regarding the institution’s CRA performance.
2. Select one or more assessment areas in each state, and one or more assessment areas in any multi-state MSA, for examination using these procedures. This is required because for interstate institutions, a rating must be assigned for each state where the institution has a branch and for each multi-state MSA/MD where the institution has branches in two or more states that comprise that MSA/MD.

Performance Context

1. Review standardized worksheets and other agency information sources to obtain relevant demographic, economic, and loan data, to the extent available, for each assessment area under review.
2. Obtain for review the Consolidated Reports of Condition (Call Reports), Uniform Bank Performance Reports (UBPRs), annual reports, supervisory reports, and prior CRA evaluations of the institution under examination to help understand the institution’s ability and capacity, including any limitations imposed by size, financial condition, or statutory, regulatory, economic or other constraints, to respond to safe and sound opportunities in the assessment area(s) for retail loans, and community development loans, qualified investments and community development services development loans, qualified investments and community development services.
3. Discuss with the institution, and consider, any information the institution may provide about its local community and economy, including community development needs and opportunities, its business strategy, its lending capacity, or information that otherwise assists in the evaluation of the institution
4. Review community contact forms prepared by the regulatory agencies to obtain information that assists in the evaluation of the institution. Contact local community, governmental or economic development representatives to update or supplement this information. Refer to the Community Contact Procedures for more detail.
5. Review any comments received by the institution or the agency since the last CRA examination.
6. By reviewing the public evaluations and other financial data, determine whether any similarly situated institutions (in terms of size, financial condition, product offerings, and business strategy) serve the same or similar assessment area(s) and would provide relevant and accurate information for evaluating the institution’s CRA performance. Consider, for example, whether the information could help identify:
1. Lending and community development opportunities available in the institution’s assessment area(s) that are compatible with the institution’s business strategy and consistent with safe and sound banking practices;
2. Constraints affecting the opportunities to make safe and sound retail loans, community development loans, qualified investments, and community development services compatible with the institution’s business strategy in the assessment area(s); and
3. Successful CRA-related product offerings or activities utilized by other lenders serving the same or similar assessment area(s).
7. Document the performance context information, particularly community development needs and opportunities, gathered for use in evaluating the institution’s performance.

Assessment Area

1. Review the institution’s stated assessment area(s) to ensure that it:
1. Consists of one or more MSAs/MDs or contiguous political subdivisions (e.g., counties, cities, or towns);
2. Includes the geographies where the institution has its main office, branches, and deposit-taking ATMs, as well as the surrounding geographies in which the institution originated or purchased a substantial portion of its loans;
3. Consists only of whole census tracts;
4. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is located in a multistate MSA/MD;
5. Does not reflect illegal discrimination; and
6. Does not arbitrarily exclude any low- or moderateincome area(s), taking into account the institution’s size, branching structure, and financial condition.
2. If an institution’s assessment area(s) does not coincide with the boundaries of an MSA/MD or political subdivision(s), assess whether the adjustments to the boundaries were made because the assessment area would otherwise be too large for the institution to reasonably serve, have an unusual configuration, or include significant geographic barriers.
3. If the assessment area(s) fails to comply with the applicable criteria described above, develop, based on discussions with management, a revised assessment area(s) that complies with the criteria. Use this assessment area(s) to evaluate the institution’s performance, but do not otherwise consider the revision in determining the institution’s rating.

Intermediate Small Institution Lending Test Performance Criteria
Loan-to-Deposit Analysis

1. From data contained in Call Reports or UBPRs, calculate the average loan-to-deposit ratio since the last examination by adding the quarterly loan-to-deposit ratios and dividing by the number of quarters.
2. Evaluate whether the institution’s average loan-todeposit ratio is reasonable in light of information from the performance context including, as applicable, the institution’s capacity to lend, the capacity of other similarly situated institutions to lend in the assessment area(s), demographic and economic factors present in the assessment area(s), and the lending opportunities available in the institution’s assessment area(s).
3. If the loan-to-deposit ratio does not appear reasonable in light of the performance context, consider whether the number and the dollar amount of loans sold to the secondary market compensate for a low loan-to-deposit ratio or supplement the institution’s lending performance.
4. Summarize in work papers conclusions regarding the institution’s loan-to-deposit ratio.

Comparison of Credit Extended Inside and Outside of the Assessment Area(s)

1. If available, review HMDA data, automated loan reports, and any other reports that may have been generated by the institution to analyze the extent of lending inside and outside of the assessment area(s). If a report generated by the institution is used, test the accuracy of the output.
2. If loan reports or data analyzing lending inside and outside of the assessment area(s) are not available or comprehensive, or if their accuracy cannot be verified, use sampling guidelines to select a sample of loans originated, purchased or committed to calculate the percentage (by number and dollar volume) located within the assessment area(s).
3. If the percentage of loans or other lending related activities in the assessment area is less than a majority, then the institution does not meet the standards for "Satisfactory" under this performance criterion. In this case, consider information from the performance context, such as information about economic conditions, loan demand, the institution’s size, financial condition, branching network, and business strategies when determining the effect of not meeting the standards for satisfactory for this criterion on the overall rating for the institution.
4. Summarize in work papers conclusions regarding the institution’s level of lending or other lending related activities inside and outside of its assessment area(s).

Distribution of Credit within the Assessment Area(s)

1. Determine whether the number and income distribution of geographies in the assessment area(s) are sufficient for a meaningful analysis of the geographic distribution of the institution’s loans in its assessment area(s).
2. If a geographic distribution analysis of the institution’s loans would be meaningful and the necessary geographic information (street address or census tract number) is collected by the institution in the ordinary course of its business, determine the distribution of the institution’s loans in its assessment area(s) among low-, moderate-, middle-, and upper-income geographies. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the assessment area(s).
3. If a geographic analysis of loans in the assessment area(s) is performed, identify groups of geographies, by income categories, in which there is little or no loan penetration. Note that institutions are not expected to lend in every geography.
4. To the extent information about borrower income (individuals) or revenues (businesses) is collected by the institution in the ordinary course of its business, determine the distribution of loans in the assessment area(s) by borrower income and by business revenues. Where possible, use the same loan reports, loan data, or sample used to compare credit extended inside and outside the assessment area(s).
5. Identify categories of borrowers by income or business revenue for which there is little or no loan penetration.
6. If an analysis of the distribution of loans among geographies of different income levels would not be meaningful (e.g., very few geographies in the assessment area(s)) or an analysis of lending to borrowers of different income or revenues could not be performed (e.g., income data are not collected for certain loans), consider possible proxies to use for analysis of the institution’s distribution of credit. Possibilities include analyzing geographic distribution by street address rather than geography (if data are available and the analysis would be meaningful) or analyzing the distribution by loan size as a proxy for income or revenue of the borrower.
7. If there are categories of low penetration, form conclusions about the reasons for that low penetration. Consider available information from the performance context, including:
1. Information about the institution’s size, branch network, financial condition, supervisory restrictions (if any) and prior CRA record;
2. Information from discussions with management, loan officers, and members of the community;
3. Information about economic conditions, particularly in the assessment area(s);
4. Information about demographic or other characteristics of particular geographies that could affect loan demand, such as the existence of a prison or college; and
5. Information about other lenders serving the same or similar assessment area(s).
8. Summarize in work papers conclusions concerning the geographic distribution of loans and the distribution of loans by borrower characteristics in the institution’s assessment area(s).

Review of Complaints

1. Review all complaints relating to the institution’s CRA performance received by the institution (these should all be contained in the institution’s public file) and those that were received by its supervisory agency.
2. If there were any complaints, evaluate the institution’s record of taking action, if warranted, in response to written complaints about its CRA performance.
3. If there were any complaints, discuss the preliminary findings in this section with management.
4. If there were any complaints, discuss the preliminary findings in this section with management.
5. Discuss the preliminary findings in the lending test section with management.

Intermediate Small Institution Community Development Test
An institution should appropriately assess the needs in its community, engage in different types of community development activities based on those needs and the isntesptist uttoi oanp’ps lcya iptas cities, and take reasonable community development resources strategically to meet those needs. The flexibility inherent in the community development test allows intermediate small institutions to focus on meeting the substance of community needs through these activities. Examiners will consider the results of any assessment by the institution of community needs along with information from community, government, civic, and other sources to gain a working knowledge of community needs.

1. Identify the number and amount of the institution’s community development loans, qualified investments, and community development services. Obtain this information through discussions with management, HMDA data collected by the institution, as applicable; investment portfolios; any other relevant financial records; and materials available to the public. Include, at the institution’s option:
1. Community development loans, qualified investments, and community development services provided by affiliates, if they are not claimed by any other institution; and
2. Community development lending by consortia or third parties.
2. Review community development loans, qualified investments, and community development services to verify that they qualify as community development.
3. If the institution participates in community development lending by consortia or third parties, or claims activities provided by affiliates, review records provided to the institution by the consortia or third parties or affiliates to ensure that the community development loans claimed by the institution do not account for more than the institution’s share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.
4. Considering the institution’s capacity and constraints and other information obtained through the performance context review, form conclusions about:
1. The number and amount of community development loans and qualified investments;
2. The extent to which the institution provides community development services, including the provision and availability of services to low- and moderate-income people, including through branches and other facilities in low- and moderate-income areas;
3. The responsiveness to the opportunities for community development lending, qualified investments, and community development services, considering:
1. The results of any assessment of community development needs and opportunities provided by the institution;
2. The examiner’s review of performance context information from community, government, civic, and other sources; and
3. Whether the amount and combination of community development loans, qualified investments, and community development services, along with their qualitative aspects, are responsive to community needs and opportunities.
5. Summarize conclusions regarding the institution’s community development performance and retain in the work papers.

Overall Intermediate Small Institution CRA Rating

1. Group the analyses of the assessment areas examined by MSA ⁸and non-MSA areas within each state where the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the assessment areas that are in that MSA.
2. Summarize conclusions about the institution’s performance in each MSA and the non-MSA portion of each state in which an assessment area received a full scope review. If two or more assessment areas in an MSA or in the non- MSA portion of a state received full scope reviews, weigh the different assessment areas considering such factors as:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The retail lending and community development opportunities in each;
3. The importance of the institution in providing loans and community development activities to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
3. For assessment areas in MSAs and non-MSA areas that were not examined using these procedures, consider facts and data related to the institution’s lending and community development activities to ensure that performance in those assessment areas is not inconsistent with the conclusions based on the assessment areas which received full scope reviews.
4. For institutions operating in only one multi-state MSA or one state, assign one of the four preliminary ratings – "Satisfactory," "Outstanding," "Needs to Improve," or "Substantial Noncompliance" -- in accordance with step 6 below. To determine the relative significance of each MSA and non-MSA area to the institution’s preliminary rating, consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The retail lending and community development opportunities in each;
3. The importance of the institution to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
5. For other institutions, assign one of the four preliminary ratings -- "Satisfactory," "Outstanding," "Needs to Improve," or "Substantial Noncompliance" -- for each state in which the institution has at least one branch and for each multi-state MSA in which the institution has branches in two or more states in accordance with step #6 below. To determine the relative significance of each MSA and the non-MSA area on the institution’s preliminary state rating, consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The retail lending and community development opportunities in each;
3. The importance of the institution in each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
6. Consult the intermediate small institution ratings matrices (lending and community development) and information in work papers to assign a preliminary rating of:
1. "Satisfactory" if the institution’s performance is rated as "Satisfactory" in each test.
2. "Needs to Improve" or "Substantial Noncompliance," depending upon the degree to which the institution’s performance has failed to meet the standards for a "Satisfactory" rating on a test; or
3. "Outstanding" if the institution is rated an "Outstanding" on both tests; or "Outstanding" on one test and the extent to which the institution meets or exceeds the "Satisfactory" criteria on the other test.
7. For an institution with branches in more than one state or multi-state MSA, assign a preliminary rating to the institution as a whole taking into account the institution’s record in different states or multi-state MSAs by considering:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The retail lending and community development opportunities in each;
3. The importance of the institution in providing loans to each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.

Community Development Test Ratings Matrix— Intermediate Small Institutions
Outstanding	Satisfactory	Needs to Improve	Substantial Noncompliance
The institution’s community development performance demonstrates excellent responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development services, as appropriate, considering the institution’s capacity and the need and availability of such opportunities for community development in the institution’s assessment area(s).	The institution’s community development performance demonstrates adequate responsiveness to the community development needs of its assessment area(s) through community development loans, qualified investments, and community development services as appropriate, considering the institution’s capacity and the need and availability of such opportunities for community development in the institution’s assessment area(s).	The institution’s community development performance demonstrates poor responsiveness to the community development needs of its assessment area(s) through community development loans, qualified investments, and community development services, as appropriate, considering the institution’s capacity and the need and availability of such opportunities for community development in the institution’s assessment area(s).	The institution’s community development performance demonstrates very poor responsiveness to the community development needs of its assessment area(s) through community development loans, qualified investments, and community development services, as appropriate, considering the institution’s capacity and the need and availability of such opportunities for community development in the institution’s assessment area(s).





8. Review the results of the most recent compliance examination and determine whether evidence of discriminatory or other illegal credit practices should lower the institution’s overall CRA rating or, if applicable, its CRA rating in any state or multi-state MSA. If evidence of discrimination or other illegal credit practices in any geography by the institution, or in any assessment area by any affiliate whose loans were considered as part of the institution’s lending performance, was found, consider:
1. The nature, extent, and strength of the evidence of the practices;
2. The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
3. Any corrective action that the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
4. Any other relevant information.
9. Assign a final rating for the institution as a whole and, if applicable, each state in which the institution has at least one branch and each multi-state MSA in which it has branches in two or more states, considering:
1. The institution’s preliminary rating; and
2. Any evidence of discriminatory or other illegal credit practices.
10. Discuss conclusions with management.
11. Write an evaluation of the institution’s performance for the examination report and the public evaluation.
12. Prepare recommendations for a supervisory strategy and for matters that require attention or follow-up activities.

Public File Checklist

1. There is no need to review each branch or each complete public file during every examination. In determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file requirements, and any other relevant information.
2. In any review of the public file undertaken, determine whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each state, and the public file(s) in the main office and in each state contain:
1. All written comments from the public relating to the institution’s CRA performance and any responses to them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
2. The institution’s most recent CRA Performance Evaluation;
3. A map of each assessment area showing its boundaries and, on the map or in a separate list, the geographies contained within the assessment area;
4. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, their street addresses and geographies;
5. A list of services (loan and deposit products and transaction fees generally offered, and hours of operation at the institution’s branches), including a description of any material differences in the availability or cost of services between those locations;
6. The institution’s loan-to-deposit ratio for each quarter of the prior calendar year;
7. A quarterly report of the institution’s efforts to improve its record if it received a less than satisfactory rating during its most recent CRA examination; and
8. HMDA Disclosure Statements for the prior two calendar years for the institution and for each nondepository affiliate the institution has elected to include in assessment of its CRA record, if applicable.
3. In any branch review undertaken, determine whether the branch provides the most recent public evaluation and a list of services generally available at its branches and a description of any material differences in the availability or cost of services at the branch (or a list of services available at the branch).

Public Notice
Determine that the appropriate CRA public notice is displayed as required by § 345.44.

The large institution performance criteria – the Lending, Investment, and Service Tests – cover all institutions with assets of $1 billion or more (as of December 31 of both of the prior two calendar years) unless they requested designation and received approval as wholesale or limited-purpose institutions or have been approved for evaluation under a strategic plan.

As under the streamlined small institution procedures, examiners are expected to exercise judgment and common sense to minimize the burden imposed by the examination process, consistent with a complete and accurate assessment of performance. Therefore, for example, examiners may be able to use economic and demographic data analyzed in an examination of an institution in examinations of other institutions serving the same or similar assessment areas. Community contacts may also be combined to cover more than one institution in a given market. In cases where an institution has analyzed its CRA performance, examiners may use those analyses, after verifying their accuracy and reliability, and should supplement those analyses when questions are raised. Examiners should consider any performance related information offered by an institution, and should request information called for by examination procedures.

Large institutions are required to collect and report certain loan data relative to small business, small farm, and community development loans. The existence of those data in automated form will permit examiners to conduct much of the necessary analysis prior to the on-site examination and thereby reduce any disruptions caused by the presence of examiners at the institution.

Examination Procedures for Large Institutions
Examination Scope
For institutions (interstate and intrastate) with more than one assessment area, identify assessment areas for a full scope review. A full scope review is accomplished when examiners complete all of the procedures for an assessment area. For interstate institutions, a minimum of one assessment area from each state, and a minimum of one assessment area from each multistate metropolitan statistical area/metropolitan division (MSA/MD), must be reviewed using the full scope examination procedures.

1. Review prior CRA performance evaluations, available community contact materials, HMDA and CRA performance data including the institution’s lending, investment, and service activities by assessment area, the lending of other lenders in those markets, and demographic information from those markets.
2. Select assessment areas for full scope review by considering the factors below.
1. The lending, investment, and service opportunities in the different assessment areas, particularly areas where the need for bank credit, investments and services is significant;
2. The level of the institution’s lending, investment, and service activity in the different assessment areas, including in low- and moderate-income areas, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies designated by the Agencies ⁹ based on (a) rates of poverty, unemployment, and population loss or (b) population size, density, and dispersion; ¹⁰
3. The number of other institutions in the different assessment areas and the importance of the institution under examination in serving the different areas, particularly any areas with relatively few other providers of financial services;
4. Comments and feedback received from community groups and the public regarding the institution’s CRA performance;
5. The size of the population;
6. The existence of apparent anomalies in the reported CRA or HMDA data for any particular assessment area(s);
7. The length of time since the assessment area(s) was last examined using a full scope review;
8. The institution’s prior CRA performance in different assessment areas;
9. Examiners’ knowledge of the same or similar assessment areas; and
10. Issues raised during CRA examinations of other institutions and prior community contacts in the institution’s assessment areas or similar assessment
    areas.

Performance Context

1. Review standardized worksheets and other agency information sources to obtain relevant demographic, economic, and loan data, to the extent available, for each assessment area under review. Compare the data to similar data for the MSA/MD, county, or state to determine how any similarities or differences will help in evaluating lending, investment, and service opportunities and community and economic conditions in the assessment area. Also consider whether the area has housing costs that are particularly high given area median income.
2. Obtain for review the Consolidated Reports of Condition (Call Reports), annual reports, supervisory reports, and prior CRA evaluations of the institution under examination to help understand the institution’s ability and capacity, including any limitations imposed by size, financial condition, or statutory, regulatory, economic or other constraints, to respond to safe and sound opportunities in the assessment area(s) for retail loans, and community development loans, investments and services.
3. Discuss with the institution, and consider, any information the institution may provide about its local community and economy, including community development needs and opportunities, its business strategy, its lending capacity, or information that otherwise assists in the evaluation of the institution.
4. Review community contact forms prepared by the regulatory agencies to obtain information that assists in the evaluation of the institution. Contact local community, governmental or economic development representatives to update or supplement this information. Refer to the Community Contact Procedures for more detail.
5. Review the institution’s public file and any comments received by the institution or the agency since the last CRA performance evaluation for information that assists in the evaluation of the institution.
6. By reviewing public evaluations and other financial data, determine whether any similarly situated institutions (in terms of size, financial condition, product offerings, and business strategy) serve the same or similar assessment area(s) and would provide relevant and accurate information for evaluating the institution’s CRA performance. Consider, for example, whether the information could help identify:
1. Lending and community development opportunities available in the institution’s assessment area(s) that are compatible with the institution’s business strategy and consistent with safe and sound banking practices;
2. Constraints affecting the opportunities to make safe and sound retail loans, community development loans, qualified investments and community development services compatible with the institution’s business strategy in the assessment area(s); and
3. Successful CRA-related product offerings or activities utilized by other lenders serving the same or similar assessment area(s).
7. Document the performance context information, particularly community development needs and opportunities, gathered for use in evaluating the institution’s performance.

Assessment Area

1. Review the institution’s stated assessment area(s) to ensure that it:
1. Consists of one or more MSAs/MDs or contiguous political subdivisions (i.e., counties, cities, or towns);
2. Includes the geographies where the institution has its main office, branches, and deposit-taking ATMs, as well as the surrounding geographies in which the institution originated or purchased a substantial portion of its loans;
3. Consists only of whole census tracts;
4. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is in a multi-state MSA/MD;
5. Does not reflect illegal discrimination; and
6. Does not arbitrarily exclude any low- or moderateincome area(s) taking into account the institution’s size, branching structure, and financial condition.
2. If the assessment area(s) does not coincide with the boundaries of an MSA/MD or political subdivision(s), assess whether the adjustments to the boundaries were made because the assessment area would otherwise be too large for the institution to reasonably serve, have an unusual configuration, or include significant geographic barriers.
3. If the assessment area(s) fails to comply with the applicable criteria described above, develop, based on discussions with management, a revised assessment area(s) that complies with the criteria. Use this assessment area(s) to evaluate the institution’s performance, but do not otherwise consider the revision in determining the institution’s rating.

Lending, Investment, and Service Tests for Large Retail Institutions
Lending Test

1. Identify the institution’s loans to be evaluated by reviewing:
1. The most recent HMDA and CRA Disclosure Statements, the interim HMDA LAR, and any interim CRA loan data collected by the institution;
2. A sample of consumer loans if consumer lending represents a substantial majority of the institution’s business so that an accurate conclusion concerning the institution’s lending record could not be reached without a review of consumer loans; and
3. Any other information the institution chooses to provide, such as small business loans secured by non-farm residential real estate, home equity loans not reported for HMDA, unfunded commitments, any information on loans outstanding, and loan distribution analyses conducted by or for the institution, including any explanations for identified concerns or actions taken to address them.
2. Test a sample of loan files to verify the accuracy of data collected and/or reported by the institution. In addition, ensure that:
1. Affiliate loans reported by the institution are not also attributed to the lending record of another affiliate subject to CRA. This can be accomplished by requesting the institution to identify how loans are attributed and how it ensures that all the loans within a given lending category (e.g., small business loans, home purchase loans, motor vehicle, credit card, home equity, other secured, and other unsecured loans) in a particular assessment area are reported for all of the institution’s affiliates if the institution elects to count any affiliate loans;
2. Loans reported as community development loans (including those originated or purchased by consortia or third parties) meet the definition of community development loans. Determine whether community development loans benefit the institution’s assessment area(s) or a broader statewide or regional area that includes the institution’s assessment area(s). Except for multi-family loans, ensure that community development loans have not also been reported by the institution or an affiliate as HMDA, small business or farm, or consumer loans. Review records provided to the institution by consortia or third parties or affiliates to ensure that the amount of the institution’s third party or consortia or affiliate lending does not account for more than the institution’s percentage share (based on the level of its participation or investment) of the total loans originated by the consortia, third parties, or affiliates; and
3. All consumer loans in a particular loan category have been included when the institution collects and maintains the data for one or more loan categories and has elected to have the information evaluated.
3. Identify the volume, both in number and dollar amount, of each type of loan being evaluated that the institution has made or purchased within its assessment area. Evaluate the institution’s lending volume considering the institution’s resources and business strategy and other information from the performance context, such as population, income, housing, and business data. Note whether the institution conducts certain lending activities in the institution and other activities in an affiliate in a way that could inappropriately influence an evaluation of borrower or geographic distribution.
4. Review any analyses prepared by or for and offered by the institution for insight into the reasonableness of the institution’s geographic distribution of lending. Test the accuracy of the data and determine if the analyses are reasonable. If areas of low or no penetration were identified, review explanations and determine whether action was taken to address disparities, if appropriate.
5. Supplement with an independent analysis of geographic distribution as necessary. As applicable, determine the extent to which the institution is serving geographies in each income category and whether there are conspicuous gaps unexplained by the performance context. Conclusions should recognize that institutions are not required to lend in every geography. The analysis should consider:
1. (Excluding affiliate lending) the number, dollar amount, and percentage of the institution’s loans located within any of its assessment areas, as well as the number, dollar amount, and percentage of the institution’s loans located outside any of its assessment areas;
2. The number, dollar amount, and percentage of each type of loan in the institution’s portfolio in each geography, and in each category of geography (low-, moderate-, middle-, and upper-income);
3. The number of geographies penetrated in each income category, as determined in step (b), and the total number of geographies in each income category within the assessment area(s);
4. The number and dollar amount of its home purchase, home refinancing, and home improvement loans, respectively in each geography compared to the number of one-to-four family owner-occupied units in each geography;
5. The number and dollar amount of multi-family loans in each geography compared to the number of multifamily structures in each geography;
6. The number and dollar amount of small business and farm loans in each geography compared to the number of small businesses/farms in each geography; and
7. Whether any gaps exist in lending activity for each income category, by identifying groups of contiguous geographies that have no loans or those with low penetration relative to the other geographies.
6. If there are groups of contiguous geographies within the institution’s assessment area with abnormally low penetration, the examiner may determine if an analysis of the institution’s performance compared to other lenders for home mortgage loans (using reported HMDA data) and for small businesses and small farm loans (using data provided by lenders subject to CRA) would provide an insight into the institution’s lack of performance in those areas. This analysis is not required, but may provide insight if:
1. The reported loan category is substantially related to the institution’s business strategies;
2. The area under analysis substantially overlaps the institution’s assessment area(s);
3. The analysis includes a sufficient number and volume of transactions, and an adequate number of lenders with assessment area(s) substantially overlapping the institution’s assessment area(s); and
4. The assessment area data is free from anomalies that can cause distortions such as dominant lenders that are not subject to the CRA, a lender that dominates a part of an area used in calculating the overall lending, or there is an extraordinarily high level of performance, in the aggregate, by lenders in the institution’s assessment area(s).
7. Using the analysis from step #6, form a conclusion as to whether the institution’s abnormally low penetration in certain areas should constitute a negative consideration under the geographic distribution performance criteria of the lending test by considering:
1. The institution’s share of reported loans made in low- and moderate-income geographies versus its share of reported loans made in middle- and upper-income geographies within the assessment area(s);
2. The number of lenders with assessment area(s) substantially overlapping the institution’s assessment area(s);
3. The reasons for penetration of these areas by other lenders, if any, and the lack of penetration by the institution being examined developed through discussions with management and the community contact process;
4. The institution’s ability to serve the subject area in light of (i) the demographic characteristics, economic condition, credit opportunities and demand; and (ii) the institution’s business strategy and its capacity and constraints;
5. The degree to which penetration by the institution in the subject area in a different reported loan category compensates for the relative lack of penetration in the subject area; and
6. The degree to which penetration by the institution in other low- and moderate-income geographies within the assessment area(s) in reported loan categories compensates for the relative lack of penetration in the subject area.
8. Review any analyses prepared by or for and offered by the institution for insight into the reasonableness of the institution’s distribution of lending by borrower characteristics. Test the accuracy of the data and determine if the analyses are reasonable. If areas of low or no penetration were identified, review explanations and determine whether action was taken to address disparities, if appropriate.
9. Supplement with an independent analysis of the distribution of the institution’s lending within the assessment area by borrower characteristics as necessary and applicable. Consider factors such as:
1. The number, dollar amount, and percentage of the institution’s total home mortgage loans and consumer loans, if included in the evaluation, to low-, moderate-, middle-, and upper-income borrowers;
2. The percentage of the institution’s total home mortgage loans and consumer loans, if included in the evaluation, to low-, moderate-, middle-, and upper-income borrowers compared to the percentage of the population within the assessment area who are low-, moderate-, middle-, and upper-income;
3. The number and dollar amount of small loans originated to businesses or farms by loan size of less than $100,000; at least $100,000 but less than $250,000; and at least $250,000 but less than or equal to $1,000,000;
4. The number and amount of the small loans to businesses or farms that had annual revenues of less than $1 million compared to the total reported number and amount of small loans to businesses or farms; and
5. If the institution adequately serves borrowers within the assessment area(s), whether the distribution of the institution’s lending outside of the assessment area based on borrower characteristics would enhance the
10. If the institution adequately serves borrowers within the assessment area(s), whether the distribution of the institution’s lending outside of the assessment area based on borrower characteristics would enhance the
1. The extent to which community development lending opportunities have been available to the institution;
2. The institution’s responsiveness to the opportunities for community development lending; and
3. The extent of leadership the institution has demonstrated in community development lending.
11. Evaluate whether the institution’s performance under the lending test is enhanced by offering innovative loan products or products with more flexible terms to meet the credit needs of low-and moderate-income individuals or geographies. Consider:
1. The degree to which the loans serve low- and moderateincome creditworthy borrowers in new ways or loans serve groups of creditworthy borrowers not previously served by the institution; and
2. The success of each product, including number and dollar amount of loans originated during the review period.
12. Discuss with management the preliminary findings in this section.
13. Summarize your conclusions regarding the institution’s lending performance under the following criteria:
1. Lending activity;
2. Geographic distribution;
3. Borrower characteristics;
4. Community development lending; and
5. Use of innovative or flexible lending practices.
14. Prepare comments for the public evaluation and the examination report.

Investment Test

1. Identify qualified investments by reviewing the institution’s investment portfolio, and at the institution’s option, its affiliate’s investment portfolio. As necessary, obtain a prospectus, or other information that describes the investment(s). This review should encompass qualified investments that were made since the previous examination (including those that have been sold or have matured) and may consider qualified investments made prior to the previous examination still outstanding. Also consider qualifying grants, donations, or in-kind contributions of property since the last examination that are for community development purposes.
2. Evaluate investment performance by determining:
1. Whether the investments benefit the institution’s assessment area(s) or a broader statewide or regional geographic area that includes the institution’s assessment area(s);
2. Whether the investments have been considered under the lending and service tests;
3. Whether an affiliate’s investments, if considered, have been claimed by another institution;
4. The dollar amount of investments made to entities that are in or serve the assessment area, in relation to the institution’s capacity and constraints, and assessment area characteristics and needs;
5. The use of any innovative or complex investments, in particular those that are not routinely provided by other investors; and
6. The degree to which investments serve low- and moderate-income areas or individuals, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies, and are responsive to available opportunities for qualified investments.
3. Discuss with management the preliminary findings in this section.
4. Summarize conclusions about the institution’s investment performance after considering:
1. The number and dollar amount of qualified investments;
2. The innovativeness and complexity of qualified investments;
3. The degree to which these types of investments are not routinely provided by other private investors; and
4. The responsiveness of qualified investments to available opportunities.
5. Write comments for the public evaluation and the examination report.

Service Test
Retail Banking Services

1. Determine from information available in the institution’s Public File:
1. The distribution of the institution’s branches among low-, moderate-, middle-, and upper-income geographies in the institution’s assessment area(s); and
2. The distribution of the institution’s branches among low-, moderate-, middle-, and upper-income geographies in the institution’s assessment area(s); and
2. Obtain the institution’s explanation for any material
   differences in the hours of operations of, or services
   available at, branches within low-, moderate-, middle-, and
   upper-income geographies in the institution’s assessment
   area(s).
3. Evaluate the institution’s record of opening and closing branch offices since the previous examination and information that could indicate whether changes have had a positive or negative effect, particularly on low- and moderate-income geographies or individuals.
4. Evaluate the accessibility and use of alternative systems for delivering retail banking services, (e.g., proprietary and non-proprietary ATMs, loan production offices (LPOs), banking by telephone or computer, and bank-at-work or by mail programs) in low- and moderate-income geographies and to low- and moderate-income individuals.
5. Assess the quantity, quality and accessibility of the institution’s service-delivery systems provided in low-, moderate-, middle-, and upper-income geographies. Consider the degree to which services are tailored to the convenience and needs of each geography (e.g., extended business hours, including weekends, evenings or by appointment, providing bi-lingual services in specific geographies, etc.).

Community Development Services

6. Identify the institution’s community development services, including at the institution’s option, services through affiliates, through discussions with management and a review of materials available from the public. Determine whether the services:
1. Qualify under the definition of community development services;
2. Benefit the assessment area(s) or a broader statewide or regional area encompassing the institution’s assessment area(s); and
3. If provided by affiliates of the institution, are not claimed by other affiliated institutions.
7. Evaluate in light of information gathered through the performance context procedures:
1. The extent of community development services offered and used;
2. Their innovativeness, including whether they serve low- or moderate-income customers in new ways or serve groups of customers not previously served; and
3. The degree to which they serve low- or moderateincome areas or individuals and their responsiveness to available opportunities for community development services.
8. Discuss with management the preliminary findings.
9. Summarize conclusions about the institution’s system for delivering retail banking and community development services, considering:
1. The distribution of branches among low-, moderate-, middle-, and upper-income geographies;
2. The institution’s record of opening and closing branches, particularly branches located in low- or moderate-income geographies or primarily serving low- or moderate-income individuals;
3. The availability and effectiveness of alternative systems for delivering retail banking services;
4. The extent to which the institution provides community development services;
5. The innovativeness and responsiveness of community development services; and
6. The range and accessibility of services provided in low-, moderate-, middle-, and upper-income geographies.
10. Write comments for the public evaluation and the examination report.

Ratings

1. Group the analyses of the assessment areas examined by MSA ¹¹ and nonmetropolitan areas within each state where the institution has branches. If an institution has branches in two or more states of a multistate MSA, group the assessment areas that are in that multistate MSA.
2. Summarize conclusions regarding the institution’s performance in each MSA and nonmetropolitan portion of each state in which an assessment area was examined using these procedures. If two or more assessment areas in an MSA or in a nonmetropolitan portion of a state were examined using these procedures, determine the relative significance of the institution’s performance in each assessment area by considering:
1. The significance of the institution’s lending, qualified investments, and lending-related services in each compared to the institution’s overall activities;
2. The lending, investment, and service opportunities in each;
3. The significance of the institution’s lending, qualified investments, and lending-related services for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
3. Evaluate the institution’s performance in those assessment area(s) not selected for examination using the full scope procedures.
1. Revisit the demographic and lending, investment, and service data considered in scoping the examination. Also, consider the institution’s operations (branches, lending portfolio mix, etc.) in the assessment area;
2. Through a review of the public file(s), consider any services that are customized to the assessment area; and
3. Consider any other information provided by the institution (e.g., CRA self-assessment) regarding its performance in the area.
4. For MSAs, and the nonmetropolitan portion of the state, where one or more assessment areas were examined using the full scope procedures, ensure that performance in the assessment areas not examined using the full scope procedures is consistent with the conclusions based on the assessment areas examined in step 2, above. Select one of the following options for inclusion in the public evaluation:
1. The institution’s [lending, investment, service] performance in [the assessment area/these assessment areas] is consistent with the institution’s [lending, investment, service] performance in the assessment areas within [the MSA/non-metropolitan portion of the state] that were reviewed using the examination procedures; and
2. The institution’s [lending/investment/service] performance in [the assessment area/these assessment areas] [exceeds/is below] the [lending/investment/ service] performance in the assessment areas within [the MSA/nonmetropolitan portion of the state] that were reviewed using the examination; however, it does not change the conclusion for the [MSA/ nonmetropolitan portion of the state].
5. For MSA, and nonmetropolitan portions of the state, where no assessment area was examined using the full scope procedures, form a conclusion regarding the institution’s lending, investment, and service performance in the assessment area(s). When there are several assessment areas in the MSA, or the nonmetropolitan portion of the state, form a conclusion regarding the institution’s performance in the MSA, or the nonmetropolitan portion of the state. Determine the relative significance of the institution’s performance in each assessment area within the MSA, or the nonmetropolitan portion of the state, by considering:
1. The significance of the institution’s lending, qualified investments, and lending-related services in each compared to the institution’s overall activities; and
2. Demographic and economic conditions in each. Also, select one of the following options for inclusion in the public evaluation:
1. The institution’s [lending, investment, service] performance in [the assessment area/these assessment areas] is consistent with the institution’s [lending, investment, service] performance [overall/ in the state]; and
2. The institution’s [lending/investment/service] performance in [the assessment area/these assessment areas] [exceeds/is below] the [lending/investment/service] performance for the [institution/state], however, it does not change the [institution’s/state] rating.
6. To determine the relative significance of each MSA and nonmetropolitan area to the institution’s overall performance (institutions operating in one state) or statewide or multistate MSA performance (institutions operating in more that one state), consider:
1. The significance of the institution’s lending, qualified investments, and lending-related services in each compared to the institution’s overall activities;
2. The lending, investment, and service opportunities in each;
3. The significance of the institution’s lending, qualified investments, and lending-related services for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
7. Using the Component Test Ratings chart below, assign component ratings that reflect the institution’s lending, investment, and service performance. In the case of an institution with branches in just one state, one set of component ratings will be assigned to the institution. In the case of an institution with branches in two or more states and multistate MSAs, component ratings will be assigned for each state or multistate MSA reviewed.

Component Test Ratings	Points for Lending	Points for Investment	Points for Service
Outstanding	12 points	6 points	6 points
High Satisfactory	9 points	4 points	4 points
Low Satisfactory	6 points	3 points	3 points
Needs to Improve	3 points	1 points	1 points
Substanial Noncompliance	0 points	0 points	0 points





8. Assign a preliminary composite rating for the institutions operating in only one state and a preliminary rating for each state or multistate MSA reviewed for institutions operating in more than one state. In assigning the rating, sum the numerical values of the component test ratings for the lending, investment and service tests and refer to the chart, below. No institution, however, may receive an assigned rating of "Satisfactory" or higher unless it receives a rating of at least "Low Satisfactory" on the lending test. In addition, an institution’s assigned rating can be no more than three times the score on the lending test.

Composite Rating	Points Needed
Outstanding	20 points or over
Satisfactory	11 through 19 points
Needs to Improve	5 through 10 points
Substanial Noncompliance	0 through 4 points





9. Consider an institution’s past performance if the prior rating was "Needs to Improve." If the poor performance has continued, an institution could be considered for a "Substantial Noncompliance" rating.
10. For institutions with branches in more than one state or multistate MSA, assign a preliminary overall rating. To determine the relative importance of each state and multistate MSA to the institution’s overall rating, consider:
1. The significance of the institution’s lending, qualified investments, and lending-related services in each compared to the institution’s overall activities;
2. The lending, investment, and service opportunities in each;
3. The significance of the institution’s lending, qualified investments, and lending-related services for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
11. Review the results of the most recent compliance examination and determine whether evidence of discriminatory or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s preliminary overall CRA rating, or the preliminary CRA rating for a state or multistate MSA. ¹² If evidence of discrimination or other illegal credit practices by the institution in any geography, or in any assessment area by any affiliate whose loans have been considered as part of the bank’s lending performance, was found, consider the following:
1. The nature, extent, and strength of the evidence of the practices;
2. The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
3. Any corrective action the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
4. Any other relevant information.
12. Assign final overall rating to the institution, considering the preliminary rating and any evidence of discriminatory or other illegal credit practices, and discuss conclusions with management.
13. Write comments and conclusions, and create charts and tables reflecting area demographics, the institution’s operation and its lending, investment and service activity in each assessment area for inclusion in the public evaluation and examination report.
14. Prepare recommendations for supervisory strategy and matters that require attention for follow-up activities.

Public File Checklist

1. There is no need to review each branch or each complete public file during every examination. In determining the extent to which the institution’s public files will be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations; its branching structure and changes to it since its last examination; complaints about the institution’s compliance with the public file requirements, and any other relevant information.
2. In any review of the public file undertaken, determine, as needed, whether branches display an accurate public notice in their lobbies and the file(s) in the main office and in each state contains:
1. All written comments from the public relating to the institution’s CRA performance and responses to them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
2. The institution’s most recent CRA Public Performance Evaluation;
3. A map of each assessment area showing its boundaries, and on the map or in a separate list, the geographies contained within the assessment area;
4. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, and their street addresses and geographies;
5. A list of services (loan and deposit products and transaction fees generally offered, and hours of operation at the institution’s branches), including a description of any material differences in the availability or cost of services between these locations;
6. The institution’s CRA disclosure statements for the prior two calendar years;
7. A quarterly report of the institution’s efforts to improve its record if it received a less than satisfactory rating during its most recent CRA examination;
8. The HMDA Disclosure Statement for the prior two calendar years for the institution and for each nondepository affiliate the institution has elected to include in assessment of its CRA record, if applicable; and
9. If applicable, the number and amount of consumer loans made to the four income categories of borrowers and geographies (low, moderate, middle and upper), and the number and amount located inside and outside of the assessment area(s).
3. In any branch review undertaken, determine whether the branch provides the most recent public evaluation and a list of services generally available at its branches and a description of any material differences in availability or cost of services at the branch (or a list of services available at the branch).

Public Notice
Determine that the appropriate CRA public notice is displayed as required by § 345.44.

In order to be evaluated under the community development test, an institution must be designated as a wholesale or limited purpose institution following submission of a written request to and approval from its primary regulator. Once an institution has received a designation, it will not normally have to reapply for that designation. The designation will remain in effect until the institution requests that it be revoked or until one year after the agency determines that the institution no longer satisfies the criteria for designation and notifies the institution of this determination.

Wholesale or limited purpose institutions are evaluated on the basis of their:

• Community development lending, qualified investments, or community development services;
• Use of innovative or complex qualified investments, community development loans, or community development services and the extent to which investments are not routinely provided by private investors; and
• Responsiveness to community credit and development needs.

Examiners must be cognizant of the context within which a wholesale or limited purpose institution operates. Examiners should recognize that these institutions may tailor their community development activities based on their own circumstances and the community development opportunities available to them in their assessment areas or the broader statewide or regional areas that include the assessment areas.

Institutions need not engage in all three categories of community development activities to be considered satisfactory under the community development test. Community development loans, investments and services can be directed to a statewide or regional market that includes the institution’s assessment area(s) and still qualify for consideration under the community development test as benefiting the assessment area(s). Moreover, if an institution has a satisfactory community development record in its assessment area(s), all community development activities regardless of their locations should be considered.

As with other performance tests, in applying the community development test, examiners should perform only those analyses that are necessary to reach an accurate conclusion about the institution’s performance, use all available, reliable information, and avoid duplication of effort to reduce burden.

Examination Procedures for Limited Purpose and Wholesale Institutions
Examination Scope

1. For institutions with more than one assessment area, identify assessment areas for full scope review. In making those selections, review prior performance evaluations, available community contact materials, reported lending data and demographic data on each assessment area and consider factors such as:
1. The lending, investment, and service activity in the different assessment areas, particularly community development activities;
2. The lending, investment, and service opportunities available in the different assessment areas, particularly community development opportunities;
3. The length of time since the assessment area(s) received a full scope review;
4. The institution’s prior CRA performance in different assessment areas;
5. The number of other institutions in the assessment areas and the importance of the institution under examination in addressing community development needs in the different assessment areas, particularly in areas with a limited number of financial service providers;
6. The existence of apparent anomalies in the reported HMDA data for any particular assessment area;
7. Examiners’ knowledge of the same or similar assessment areas; and
8. Comments from the public regarding the institution’s CRA performance.
2. For interstate institutions, a rating must be assigned for each state where the institution has a branch and for each multi-state metropolitan statistical areas/metropolitan divisions (MSA/MD) where the institution has branches in two or more of the states that comprise the multi-state MSA/MD. Select one or more assessment areas in each state for examination using the full scope procedures.

Performance Context

1. Review standardized worksheets and other agency information sources to obtain relevant demographic, economic, and loan data, to the extent available, for each assessment area under review. Consider, among other things, whether housing costs are particularly high in relation to area median income.
2. Consider any information the institution may provide on its local community and economy and its community development lending, qualified investment, and community development service capacity or that otherwise assists in the evaluation of the institution’s community development activities.
3. Review community contact forms prepared by the regulatory agencies to obtain information that assists in the evaluation of the institution’s community development activities. Contact local community, government, or economic development representatives to update or supplement information about community development activities in the assessment area(s) or the broader statewide or regional areas of which the assessment area(s) is a part.
4. Identify barriers, if any, to participation by the institution in local community development activities. For example, evaluate the institution’s ability and capacity to help meet the community development needs of its assessment area(s) through a review of the uniform bank performance report (UBPR), the consolidated report of condition (Call Report), annual reports, supervisory reports, prior CRA performance evaluations, and financial information for other wholesale/limited purpose institutions serving approximately the same assessment area(s).
5. Review the institution’s public file and any comments received by the institution or the agency since the last CRA performance evaluation for information that assists in the evaluation of the institution.
6. Document the performance context information gathered for use in evaluating the institution’s CRA record.

Assessment Area

1. Review the institution’s stated assessment area(s) to ensure that it:
1. Consists of one or more MSAs/MDs or contiguous political subdivisions (i.e., counties, cities, or towns) where the institution has its main office, branches, and deposit-taking ATMs;
2. Consists only of whole census tracts;
3. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is located in a multistate MSA/MD;
4. Consists of separate delineations for areas that extend substantially across MSA/MD or state boundaries unless the assessment area is located in a multistate MSA/MD;
5. Does not arbitrarily exclude any low- or moderateincome area(s) taking into account the institution’s size and financial condition.
2. If the assessment area(s) does not coincide with the boundaries of an MSA/MD or political subdivision(s), assess whether the adjustments to the boundaries were made because the assessment area would otherwise be too large for the institution to reasonably serve, have an unusual configuration, or include significant geographic barriers.
3. If the assessment area(s) fails to comply with the applicable criteria described above, develop, based on discussions with management, a revised assessment area(s) that complies with the criteria. Use this assessment area(s) to evaluate the institution’s performance, but do not otherwise consider the revision in determining the institution’s rating.

Community Development Test

1. Identify the number and amount of the institution’s community development loans, (originations and purchases of loans and any other data the institution chooses to provide), qualified investments, and community development services. Obtain this information through discussions with management, HMDA data collected by the institution, as applicable; investment portfolios; any other relevant financial records; and materials available to the public. Include, at the institution’s option:
1. Community development loans, qualified investments, and community development services provided by affiliates, if they are not claimed by any other institution; and
2. Community development lending by consortia or third parties.
2. Review community development loans, qualified investments, and community development services to verify that they qualify as community development.
3. If the institution participates in community development lending by consortia or third parties, or claims activities provided by affiliates, review records provided to the institution by the consortia or third parties or affiliates to ensure that the community development loans claimed by the institution do not account for more than the institution’s share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.
4. Considering the institution’s capacity and constraints and other information obtained through the performance context review, form conclusions about:
1. The extent, by number and dollar amount of community development loans, services, and qualified investments;
2. The degree of innovation in community development activities (e.g., serving low- or moderate-income borrowers in new ways or serving groups of creditworthy borrowers not previously served by the institution);
3. The complexity of those community development activities, such as the use of enhancements or other features specifically designed to expand community development lending;
4. The responsiveness to the opportunities for community development lending, qualified investments, and community development services; and
5. The degree to which the institution’s qualified investments serve needs not routinely provided by other private investors.
5. Summarize conclusions regarding the institution’s community development performance and retain in the work papers.

Ratings

1. Review the analyses of the institution’s performance in each assessment area examined, considering only those community development activities that benefit the assessment area(s) and the broader statewide or regional area(s) that include the assessment area(s).
2. Group the analyses of the assessment areas examined by MSA ¹³ and nonmetropolitan areas within each state where the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the assessment areas in that MSA.
3. Summarize conclusions about the institution’s performance in each MSA and the nonmetropolitan portion of each state in which an assessment area was examined using these procedures. If two or more assessment areas in an MSA or in the nonmetropolitan portion of a state were examined using these procedures, determine the relative significance of the institution’s performance in each assessment area by considering:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The community development opportunities in each;
3. The significance of the institution’s activities for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
4. For assessment areas in MSAs and nonmetropolitan areas that were not examined, consider facts and data related to the institution’s community development lending, investment, and service activities to ensure that performance in those areas is not inconsistent with the conclusions based on the assessment areas examined.
5. Assign a preliminary rating for an institution with operations in one state only using the Community Development Ratings Matrix. For an institution with operations in more than one state or multi-state MSA, assign a preliminary rating for each state, using the Community Development Ratings Matrix. To determine the relative significance of each MSA and nonmetropolitan area to the institution’s overall rating (institutions operating in only one state) or state-wide or multi-state MSA rating (institutions operating in more that one state), consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The community development opportunities in each;
3. The significance of the institution’s activities for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
6. For institutions with operations in more than one state or multi-state MSA, assign a preliminary rating for the institution as a whole. To determine the relative significance of each state or multi-state MSA consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The community development opportunities in each;
3. The significance of the institution’s activities for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
7. If the institution is adequately meeting the community development needs of each of its assessment area(s), consider those community development activities, if any, that benefit areas outside of the assessment area(s) or a broader statewide or regional area that includes the assessment area(s). Determine whether those activities enhance the preliminary rating. If so, adjust the rating(s) accordingly.
8. Consider an institution’s past performance if the prior rating was "Needs to Improve." If the poor performance has continued, an institution could be considered for a "Substantial Noncompliance" rating.
9. Review the results of the most recent compliance examination and determine whether evidence of discrimination or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s preliminary composite rating or the preliminary CRA rating for a state or multistate MSA. ¹⁴ If evidence of discrimination or other illegal credit practices by the institution in any geography, or in any assessment area by any affiliate whose loans have been considered as part of the bank’s lending performance, was found, consider the following:
1. The nature, extent, and strength of the evidence of the practices;
2. The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
3. Any corrective action the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
4. Any other relevant information.
10. Assign a final composite rating to the institution, considering the preliminary rating and any evidence of discriminatory or other illegal credit practices, and discuss conclusions with management.
11. Write comments for the public evaluation and examination report.
12. Prepare recommendations for supervisory strategy and matters that require attention for follow-up activities.

Public File Checklist

1. There is no need to review each branch or each complete public file during every examination. In determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file requirements, and any other relevant information.
2. In any review of the public file undertaken, determine whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each state, and the public file(s) in the main office and in each state contain:
1. All written comments from the public relating to the institution’s CRA performance and any responses to them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
2. The institution’s most recent CRA Performance Evaluation;
3. A map of each assessment area showing its boundaries and, on the map or in a separate list, the geographies contained within the assessment area;
4. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, their street addresses and geographies;
5. A list of services (loan and deposit products and transaction fees generally offered, and hours of operation at the institution’s branches), including a description of any material differences in the availability or cost of services between those locations;
6. The institution’s CRA Disclosure Statement(s) for the prior two calendar years;
7. A quarterly report of the institution’s efforts to improve its record if it received a less than satisfactory rating during its most recent CRA examination;
8. HMDA Disclosure Statements for the prior two calendar years and those of each non-depository affiliate the institution has elected to include in assessment of its CRA record, if applicable; and
9. If applicable, the number and dollar amount of consumer loans made to the four income categories of borrowers and geographies (low-, moderate-, middle-, and upper-income), located inside and outside of the assessment area(s).
3. In any branch review undertaken, determine whether the branch provides the most recent public evaluation, and a list of services generally available at its branches, and a description of any material differences in the availability or cost of services at the branch (or a list of services available at the branch).

Public Notice
Determine that the appropriate CRA public notice is displayed as required by § 345.44.

The regulations permit any institution to develop, and submit for approval by its primary supervisory agency, a strategic plan (Plan) for addressing its responsibilities with respect to CRA. The regulations require that the plan be developed in consultation with members of the public and that it be published for public comment. The plan must contain measurable annual goals. A single plan can contain goals designed to achieve only a "Satisfactory" rating or, at the institution’s option, can contain goals designed to achieve a "Satisfactory" rating, as well as goals designed to achieve an "Outstanding" rating.

This approach to addressing an institution’s CRA responsibilities presents an opportunity for a very straightforward examination. The first question an examiner should investigate is whether the goals were met. If they were, the appropriate rating should be assigned. The appropriateness of the goals will have already been determined in the process of public comment and agency review and approval. Consequently, further investigation relating to the context of the institution should not be necessary. Obviously, if some or all of the plan’s goals were not met, the examiner will be required to evaluate such issues as whether they were substantially met and in doing so will have to exercise some judgment regarding the degree to which they are missed and the causes.

However, the examiner should approach an examination of an institution operating under a plan understanding that part of the purpose for these regulatory provisions was to give the institution significant latitude in designing a program that is appropriate to its own capabilities, business strategies and organizational framework, as well as to the communities that it serves. Consequently, the institution may develop plans for a single assessment area that it serves, for some, but not all, of the assessment areas that it serves, or for all of them. It may develop a plan that incorporates and coordinates the activities of various affiliates. It will be the examiner’s challenge to evaluate institutions operating under one plan or a number of plans in a way that accurately reflects the results achieved and that sensibly wraps that evaluation into the overall assessment of the institution.

As with other aspects of the CRA examination, the examiner should first make the greatest use possible of information available from the agencies to evaluate performance under the plan. However, it is likely that some elements of a plan under review will not be reflected in public or other agency data. Consequently, the examiner may, of necessity, have to ask the institution for the data necessary to determine whether it has met its goals. The examiner should do so, to the greatest extent possible, by asking the institution to provide data for review prior to going on-site for the examination. The examiner should also seek to mitigate burden by, wherever possible, using data in the form maintained by the institution.

Examination Procedures for Institutions with Strategic Plans
Examination Scope

1. For institutions with more than one assessment area, identify assessment areas for full scope review. To select one or more assessment areas for full scope review, analyze prior performance evaluations, available community contact materials, reported lending data and demographic data on each assessment area and consider factors such as:
1. The level of the institution’s lending, investment and service activity in the different assessment areas, including low- and moderate-income areas, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies designated by the Agencies ¹⁵based on (a) rates of poverty, unemployment, and population loss or (b) population size, density, and dispersion ¹⁶;
2. The number of other institutions in the different assessment areas and the importance of the institution under examination in meeting credit needs in the different assessment areas, particularly in areas with a limited number of financial service providers;
3. The existence of apparent anomalies in the reported lending data for any particular assessment area(s);
4. The time since the assessment area(s) most recently received a full scope examination;
5. Performance that falls short of plan goals based on a review of available data;
6. The institution’s prior CRA performance in the different assessment areas; and
7. Comments from the public regarding the institution’s CRA performance.
2. For interstate institutions, a rating must be assigned for each state where the institution has a branch and in every multistate MSA where the institution has branches in two or more of the states that comprise that multistate MSA. Select one or more assessment areas in each state for examination using these procedures.

Performance Context

1. Review the institution’s public file for any comments received by the institution or the agency since the last CRA performance evaluation that assists in evaluating the institution’s record of meeting plan goals.
2. Consider any information that the institution provides on its record of meeting plan goals.
3. Contact local community, governmental or economic development representatives to update or supplement information about the institution’s record of meeting plan goals.
4. As necessary, consider any information the institution or others may provide on local community and economic conditions that may affect the institution’s ability to meet plan goals or otherwise assist in the evaluation of the institution.

Performance Criteria

1. Review the following:
1. The approved plan and approved amendments;
2. The agency’s approval process files; and
3. Written comments from the public that the institution or the agency received since the plan became effective.
2. Determine whether the institution achieved its performance goals for each assessment area examined.
1. Review the plan’s measurable annual goals for each performance category and assessment area(s) to be reviewed.
2. Obtain information and data about the institution’s actual performance for the period that has elapsed since the previous examination.
3. Compare the plan goals for each assessment area reviewed to the institution’s actual performance since its last examination in each assessment area reviewed to determine if all of the plan’s goals have been met.
3. If any goals were not met, form a conclusion as to whether the plan goals were "substantially met." In doing so, consider the number of unmet goals, the degree to which the goals were not met, the importance of those goals to the plan as a whole, and the reasons why the goals were not met (e.g., economic factors beyond the institution’s control).
4. Discuss preliminary findings with management.
5. Summarize conclusions about the institution’s performance.

Ratings
These instructions assume that the strategic plan covers all of the institution’s assessment areas. If not, the analysis of performance for the assessment area(s) covered by the strategic plan must be combined with the analyses for assessment areas that were subject to other assessment method(s) in order to assign a rating.

1. Group the analyses of the assessment areas examined by MSA ¹⁷ and nonmetropolitan areas within each state where the institution has branches. If an institution has branches in two or more states of a multi-state MSA, group the assessment areas that are in that MSA.
2. If the institution has substantially met its plan goals for a satisfactory rating or, if applicable, an outstanding rating, in all assessment areas reviewed, summarize conclusions about the institution’s performance in each MSA and the nonmetropolitan area of each state in which an assessment area was examined using these procedures. Assign the appropriate preliminary rating for the institution and, as applicable, each state or multistate MSA and proceed to Step 6, below.
3. If the institution did not substantially meet its plan goals in each assessment area, check to determine if the institution elected in its plan to be evaluated under an alternate assessment method.
1. If the institution did not elect in the plan to be evaluated under an alternate assessment method, assign a "Needs to Improve" or "Substantial Noncompliance" rating to those assessment areas in which plan goals were not substantially met, depending on the number of goals missed, the extent to which they were missed, and their importance to the plan overall.
2. If the institution elected in its plan to be evaluated under an alternate assessment method, perform the appropriate procedures to evaluate and rate the institution’s performance in those assessment areas in which the institution did not meet plan goals.
4. For institutions operating in multiple assessment areas, determine the relative importance of the assessment areas reviewed in forming conclusions for each MSA and the nonmetropolitan area within each state and for any multistate MSA where the institution has branches in two or more states. In making that determination, consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending, service, and investment opportunities in each;
3. The significance of the institution’s loans, qualified investments, and lending-related services, as applicable, for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
5. For an institution operating in multiple MSAs or nonmetropolitan areas in one or more states or multi-state MSAs, assign a preliminary rating for each state and multi-state MSA. To determine the relative significance of each MSA and nonmetropolitan area to the rating in a state, consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending, service, and investment opportunities in each;
3. The significance of the institution’s loans, qualified investments, and lending-related services, as applicable, for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
6. For institutions with operations in more than one state, assign a preliminary overall rating. In determining the relative significance of the institution’s performance in each state or multistate MSA to its overall rating consider:
1. The significance of the institution’s activities in each compared to the institution’s overall activities;
2. The lending, service, and investment opportunities in each;
3. The significance of the institution’s loans, qualified investments, and lending-related services, as applicable, for each, particularly in light of the number of other institutions and the extent of their activities in each; and
4. Demographic and economic conditions in each.
7. Review the results of the most recent compliance examination and determine whether evidence of discriminatory or other illegal credit practices that violate an applicable law, rule, or regulation should lower the institution’s overall CRA rating or, if applicable, its CRA rating in any state or multi-state MSA. ¹⁸ If evidence of discrimination or other illegal credit practices in any geography by the institution, or in any assessment area by any affiliate whose loans were considered as part of the institution’s lending performance, was found, consider:
1. The nature, extent, and strength of the evidence of the practices;
2. The policies and procedures that the institution (or affiliate, as applicable) has in place to prevent the practices;
3. Any corrective action the institution (or affiliate, as applicable) has taken, or has committed to take, including voluntary corrective action resulting from self-assessment; and
4. Any other relevant information.
8. Discuss conclusions with management and assign a final rating to the institution and state or multi-state MSA ratings, as applicable, considering the preliminary rating and any evidence of discrimination and other illegal credit practices.
9. Write comments for the public evaluation and the examination report.

Public File Checklist

1. There is no need to review each branch or each complete public file during every examination. In determining the extent to which the institution’s public files should be reviewed, consider the institution’s record of compliance with the public file requirements in previous examinations, its branching structure and changes to it since its last examination, complaints about the institution’s compliance with the public file requirements, and any other relevant information.
2. In any review of the public file undertaken, determine whether branches display an accurate public notice in their lobbies, a complete public file is available in the institution’s main office and at least one branch in each state, and the public file available in the main office and in each state contains:
1. A copy of the approved strategic plan;
2. All written comments from the public relating to the institution’s CRA performance and any responses to them for the current and preceding two calendar years (except those that reflect adversely on the good name or reputation of any persons other than the institution);
3. The institution’s most recent CRA Performance Evaluation;
4. A map of each assessment area showing its boundaries and, on the map or in a separate list, the geographies contained within the assessment area;
5. A list of the institution’s branches, branches opened and closed during the current and each of the prior two calendar years, their street addresses and geographies;
6. A list of services (loan and deposit products and transaction fees generally offered, and hours of operation at the institution’s branches), including a description of any material differences in the availability or cost of services between those locations;
7. The institution’s CRA Disclosure Statement(s) for the prior two calendar years;
8. A quarterly report of the institution’s efforts to improve its record if it received a less than satisfactory rating during its most recent CRA examination;
9. HMDA Disclosure Statements for the prior two calendar years for the institution and for each nondepository affiliate the institution has elected to include in assessment of its CRA record, if applicable;
10. The number and dollar amount of consumer loans, for large banks, if applicable; and
11. The loan-to-deposit ratio, for small institutions.
3. In any branch review undertaken, determine whether the branch provides the most recent public evaluation and a list of services generally available at its branches and a description of any material differences in the availability or cost of services at the branch (or a list of services available at the branch).

Public Notice
Determine that the appropriate CRA public notice is displayed as required by § 345.44.

In assigning a rating, the FDIC evaluates a bank’s performance under the applicable performance criteria in the regulation, in accordance with Section 345.21 and Section 345.28, which provides for adjustments on the basis of evidence of discriminatory or other illegal credit practices. A bank’s performance need not fit each aspect of a particular rating profile in order to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. The bank’s overall performance, however, must be consistent with safe and sound banking practices and generally with the appropriate profile as follows.

Ratings Definitions
The following ratings definitions are to be used.

"Outstanding" An institution in this group has an outstanding record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities.

"Satisfactory" An institution in this group has a satisfactory record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities.

"Needs to Improve" An institution in this group needs to improve its overall record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities.

"Substantial Noncompliance" An institution in this group has a substantially deficient record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities.

Banks Evaluated under the Lending, Investment, and Service Tests
Lending Performance Rating. The FDIC assigns each bank’s lending performance one of the five following ratings:

• Outstanding. The FDIC rates a bank’s lending performance "outstanding" if, in general, it demonstrates:
• Excellent responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s);
• A substantial majority of its loans are made in its assessment area(s);
• An excellent geographic distribution of loans in its assessment area(s);
• An excellent distribution, particularly in its assessment area(s), of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;
• An excellent record of serving the credit needs of highly economically disadvantaged areas in its assessment area(s), low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;
• Extensive use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and
• It is a leader in making community development loans.
• High Satisfactory. The FDIC rates a bank’s lending performance "high satisfactory" if, in general, it demonstrates:
• Good responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans (as applicable) in its assessment area(s);
• A high percentage of its loans are made in its assessment area(s);
• A good geographic distribution of loans in its assessment area(s);
• A good distribution, particularly in its assessment area(s), of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;
• A good record of serving the credit needs of highly economically disadvantaged areas in its assessment area(s), low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;
• Use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and
• It has made a relatively high level of community development loans.
• Low Satisfactory. The FDIC rates a bank’s lending performance "low satisfactory" if, in general, it demonstrates:
• Adequate responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s);
• An adequate percentage of its loans are made in its assessment area(s);
• An adequate geographic distribution of loans in its assessment area(s);
• An adequate distribution, particularly in its assessment area(s), of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;
• An adequate record of serving the credit needs of highly economically disadvantaged areas in its assessment area(s), low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;
• Limited use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and
• It has made an adequate level of community development loans.
• Needs to Improve. The FDIC rates a bank’s lending performance "needs to improve" if, in general, it demonstrates:
• Poor responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans (as applicable) in its assessment area(s);
• A small percentage of its loans are made in its assessment area(s);
• A poor geographic distribution of loans, particularly to low- or moderate-income geographies, in its assessment area(s);
• A poor distribution, particularly in its assessment area(s), of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;
• A poor record of serving the credit needs of highly economically disadvantaged areas in its assessment area(s), low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;
• Little use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and
• It has made a limited number of community development loans.
• Substantial Noncompliance. The FDIC rates a bank’s lending performance as being in "substantial noncompliance" if, in general, it demonstrates:
• A very poor responsiveness to credit needs in its assessment area(s), taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s);
• A very small percentage of its loans are made in its assessment area(s);
• A very poor geographic distribution of loans, particularly to low- or moderate-income geographies, in its assessment area(s);
• A very poor distribution, particularly in its assessment area(s), of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;
• A very poor record of serving the credit needs of highly economically disadvantaged areas in its assessment area(s), low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;
• No use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and
• It has made few, if any, community development loans.

Investment Performance Rating.
The FDIC assigns each bank’s investment performance one of the five following ratings.

• Outstanding. The FDIC rates a bank’s investment performance "outstanding" if, in general, it demonstrates:
• An excellent level of qualified investments, particularly those that are not routinely provided by private investors, often in a leadership position;
• Extensive use of innovative or complex qualified investments; and
• Excellent responsiveness to credit and community development needs.
• High Satisfactory. The FDIC rates a bank’s investment performance "high satisfactory" if, in general, it demonstrates:
• A significant level of qualified investments, particularly those that are not routinely provided by private investors, occasionally in a leadership position;
• Significant use of innovative or complex qualified investments; and
• Good responsiveness to credit and community development needs.
• Low Satisfactory. The FDIC rates a bank’s investment performance "low satisfactory" if, in general, it demonstrates:
• An adequate level of qualified investments, particularly those that are not routinely provided by private investors, although rarely in a leadership position;
• Occasional use of innovative or complex qualified investments; and
• Adequate responsiveness to credit and community development needs.
• Needs to Improve. The FDIC rates a bank’s investment performance "needs to improve" if, in general, it demonstrates:
• A poor level of qualified investments, particularly those that are not routinely provided by private investors;
• Rare use of innovative or complex qualified investments; and
• Poor responsiveness to credit and community development needs.
• Substantial Noncompliance. The FDIC rates a bank’s investment performance as being in "substantial noncompliance" if, in general, it demonstrates:
• Few, if any, qualified investments, particularly those that are not routinely provided by private investors;
• No use of innovative or complex qualified investments; and
• Very poor responsiveness to credit and community development needs.

Service Performance Rating
The FDIC assigns each bank’s service performance one of the five following ratings:

• Outstanding. The FDIC rates a bank’s service performance "outstanding" if, in general, the bank demonstrates:
• Its service delivery systems are readily accessible to geographies and individuals of different income levels in its assessment area(s);
• To the extent changes have been made, its record of opening and closing branches has improved the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;
• Its services (including, where appropriate, business hours) are tailored to the convenience and needs of its assessment area(s), particularly low- or moderateincome moderateincome geographies or low- or moderate-income individuals; and
• It is a leader in providing community development services.
• High Satisfactory. The FDIC rates a bank’s service performance "high satisfactory" if, in general, the bank demonstrates:
• Its service delivery systems are accessible to geographies and individuals of different income levels in its assessment area(s);
• To the extent changes have been made, its record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderate-income individuals;
• Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment area(s), particularly low- and moderateincome geographies and low- and moderate-income individuals; and
• It provides a relatively high level of community development services.
• Low Satisfactory. The FDIC rates a bank’s service performance "low satisfactory" if, in general, the bank demonstrates:
• Its service delivery systems are reasonably accessible to geographies and individuals of different income levels in its assessment area(s);
• To the extent changes have been made, its record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderate-income individuals;
• Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment area(s), particularly low- and moderateincome geographies and low- and moderate-income individuals; and
• It provides an adequate level of community development services.
• Needs to Improve. The FDIC rates a bank’s service performance "needs to improve" if, in general, the bank demonstrates:
• Its service delivery systems are unreasonably inaccessible to portions of its assessment area(s), particularly to low- or moderate-income geographies or to low- or moderate-income individuals;
• To the extent changes have been made, its record of opening and closing branches has adversely affected the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;
• Its services (including, where appropriate, business hours) vary in a way that inconveniences its assessment area(s), particularly low- or moderate- income geographies or low- or moderate-income individuals; and
• It provides a limited level of community development services.
• Substantial Noncompliance. The FDIC rates a bank’s service performance as being in "substantial noncompliance" if, in general, the bank demonstrates:
• Its service delivery systems are unreasonably inaccessible to significant portions of its assessment area(s), particularly to low- or moderate-income geographies or to low- or moderate-income individuals;
• To the extent changes have been made, its record of opening and closing branches has significantly adversely affected the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;
• Its services (including, where appropriate, business hours) vary in a way that significantly inconveniences its assessment area(s), particularly low- or moderateincome geographies or low- or moderate-income individuals; and
• It provides few, if any, community development services.

Wholesale or Limited-Purpose Banks
The FDIC assigns each wholesale or limited-purpose bank’s community development performance one of the four following ratings:

• Outstanding. The FDIC rates a wholesale or limitedpurpose bank’s community development performance "outstanding" if, in general, it demonstrates:
• A high level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;
• Extensive use of innovative or complex qualified investments, community development loans, or community development services; and
• Excellent responsiveness to credit and community development needs in its assessment area(s).
• Satisfactory. The FDIC rates a wholesale or limitedpurpose bank’s community development performance "satisfactory" if, in general, it demonstrates:
• An adequate level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;
• Occasional use of innovative or complex qualified investments, community development loans, or community development services; and
• Adequate responsiveness to credit and community development needs in its assessment area(s).
• Needs to Improve. The FDIC rates a wholesale or limitedpurpose bank’s community development performance as "needs to improve" if, in general, it demonstrates:
• A poor level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;
• Rare use of innovative or complex qualified investments, community development loans, or community development services; and
• Poor responsiveness to credit and community development needs in its assessment area(s).
• Substantial Noncompliance. The FDIC rates a wholesale or limited-purpose bank’s community development performance in "substantial noncompliance" if, in general, it demonstrates:
• Few, if any, community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;
• No use of innovative or complex qualified investments, community development loans, or community development services; and
• Very poor responsiveness to credit and community development needs in its assessment area(s).

Banks Evaluated under the Small Bank Performance Standards
Lending Test Ratings

• Eligibility for a Satisfactory lending test rating. The FDIC rates a small bank’s lending performance "satisfactory" if, in general, the bank demonstrates:
• A reasonable loan-to-deposit ratio (considering seasonal variations) given the bank’s size, financial condition, the credit needs of its assessment area(s), and taking into account, as appropriate, other lendingrelated activities such as loan originations for sale to the secondary markets and community development loans and qualified investments;
• A majority of its loans and, as appropriate, other lending-related activities are in its assessment area(s);
• A distribution of loans to and, as appropriate, other lending related-activities for individuals of different income levels (including low- and moderate-income individuals) and businesses and farms of different sizes that is reasonable given the demographics of the bank’s assessment area(s);
• A record of taking appropriate action, as warranted, in response to written complaints, if any, about the bank’s performance in helping to meet the credit needs of its assessment area(s); and
• A reasonable geographic distribution of loans given the bank’s assessment area(s).
• Eligibility for an Outstanding lending test rating. A small bank that meets each of the standards for a "satisfactory" rating under this paragraph and exceeds some or all of those standards may warrant consideration for a lending test rating of "outstanding."
• Needs to Improve or Substantial Noncompliance ratings. A small bank also may receive a lending test rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

Community Development Test Ratings for Intermediate Small Banks.

• Eligibility for a Satisfactory community development test rating. The FDIC rates a an intermediate small bank’s community development performance "satisfactory" if the bank demonstrates adequate responsiveness to the community development needs of its assessment area(s) through community development loans, qualified investments, and community development services. The adequacy of the bank’s response will depend on its capacity for such community development activities, its assessment area’s need for such community development activities, and the availability of such opportunities for community development in the bank’s assessment area(s).
• Eligibility for an Outstanding community development test rating. The FDIC rates an intermediate small bank’s community development performance "outstanding" if the bank demonstrates excellent responsiveness to community development needs in its assessment area(s) through community development loans, qualified investments, and community development services, as appropriate, considering the bank’s capacity and the need and availability of such opportunities for community development in the bank’s assessment area(s).
• Needs to Improve or Substantial Noncompliance ratings. An intermediate small bank may also receive a community development test rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

Overall Rating

• Eligibility for a Satisfactory overall rating. No intermediate small bank may receive an assigned overall rating of "satisfactory" unless it receives a rating of a least "satisfactory" on both the lending test and the community development test.
• Eligibility for an Outstanding overall rating. An intermediate small bank that receives an "outstanding" rating on one test and at least "satisfactory" on the other test may receive an assigned overall rating of "outstanding."
• A small bank that is not an intermediate small bank that meets each of the standards for a "satisfactory" rating under the lending test and exceeds some or all of those standards may warrant consideration for an overall rating of "outstanding." In assessing whether a bank's performance is "outstanding," the FDIC considers the extent to which the bank exceeds each of the performance standards for a "satisfactory" rating and its performance in making qualified investments and its performance in providing branches and other services and delivery systems that enhance credit availability in its assessment area(s).
• Needs to Improve or Substantial Noncompliance overall ratings. A small bank may also receive a rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

Strategic Plan Assessments
The FDIC assesses the performance of a bank operating under an approved plan to determine if the bank has met its plan goals:

• Satisfactory. If the bank substantially achieves its plan goals for a satisfactory rating, the FDIC will rate the bank’s performance as "satisfactory".
• Outstanding. If the bank exceeds it plan goals for a satisfactory rating and substantially achieves it plan goals for an outstanding rating, the FDIC will rate the bank’s performance under the plan as "outstanding".
• If the bank fails to meet substantially its plan goals for a satisfactory rating, the FDIC will rate the bank as either Needs to Improve or Substantial Noncompliance, depending on the extent to which it falls short of its plan goals, unless the bank elected in its plan to be rated otherwise, as provided in Section 345.27(f)(4).

Introduction
Section 711 of the Gramm-Leach-Bliley Act (GLBA) added a new section 48 to the Federal Deposit Insurance Act (FDI Act) entitled "CRA Sunshine Requirements.’’ This section requires nongovernmental entities or persons (NGEPs), insured depository institutions (IDIs), and affiliates of insured depository institutions that are parties to certain agreements that are in fulfillment of the Community Reinvestment Act (CRA) to make the agreements available to the public and the appropriate agency and to file annual reports concerning the agreements with the appropriate agency. The interagency regulations implementing GLBA’s CRA Sunshine Requirements were published January 10, 2001. The GLBA CRA Sunshine Requirements and the implementing CRA Sunshine Regulations do not affect the Community Reinvestment Act of 1977, its implementing regulations, or the agencies’ interpretations or administration of that act or regulation.

The CRA Sunshine Regulations identify the types of written agreements that are covered by the statute (referred to as covered agreements), define many of the terms used in the statute, describe how the parties to a covered agreement must make the agreement available to the public and the appropriate agencies, and explain the type of information that must be included in the annual report filed by a party to a covered agreement. However, neither GLBA nor the CRA Sunshine Regulations give the agencies any authority to enforce the provisions of any covered agreement.

The CRA Sunshine Regulations, entitled "Disclosure and Reporting of CRA-Related Agreements," became effective April 1, 2001. As described in the Regulations and outlined in the Summary of the Disclosure and Reporting Requirements of the Regulation, the disclosure requirements apply to covered agreements entered into after November 12, 1999, and the annual reporting requirements apply to covered agreements entered into on or after May 12, 2000.

Definitions
In addition to the definitions described below, §346.11 of the CRA Sunshine Regulations provide other definitions, including ones for "affiliate" and "term of agreement."

"Covered Agreement" is any contract, arrangement, or understanding that meets all of the following criteria:

1. The agreement is in writing.
2. The parties to the agreement include:
1. One or more insured depository institutions or affiliates of an insured depository institution; and
2. One or more NGEPs.
3. The agreement provides for the insured depository institution or any affiliate to:
1. Provide to one or more individuals or entities (whether or not parties to the agreement) cash payments, grants, or other consideration (except loans) that have an aggregate value of more than $10,000 in any calendar year; or
2. Make to one or more individuals or entities (whether or not parties to the agreement) loans that have an aggregate principal amount of more than $50,000 in any calendar year.
4. The agreement is made pursuant to, or in connection with, the fulfillment of the CRA.
5. The agreement is with a NGEP that has had a CRA communication prior to entering into the agreement.

A "Covered Agreement" does not include:

1. Any individual loan that is secured by real estate; or
2. Any specific contract or commitment for a loan or extension of credit to an individual, business, farm, or other entity, or group of such individuals or entities if:
1. The funds are loaned at rates that are not substantially below market rates; and
2. The loan application or other loan documentation does not indicate that the borrower intends or is authorized to use the borrowed funds to make a loan or extension of credit to one or more third parties.

A "CRA affiliate" of an insured depository institution is any company that is an affiliate of an insured depository institution to the extent, and only to the extent, that the activities of the affiliate were considered by the appropriate Federal banking agency when evaluating the CRA performance of the institution at its most recent CRA examination prior to the agreement. An insured depository institution or affiliate also may designate any company as a CRA affiliate at any time prior to the time a covered agreement is entered into by informing the NGEP that is a party to the agreement of such designation.

A "CRA communication" is any of the following that meet the timing and knowledge requirements of §346.3(b).

1. Any written or oral comment or testimony provided to a Federal banking agency concerning the adequacy of the performance under the CRA of the insured depository institution, any affiliated insured depository institution, or any CRA affiliate.
2. Any written comment submitted to the insured depository institution that discusses the adequacy of the performance under the CRA of the institution and must be included in the institution’s CRA public file.
3. Any discussion or other contact with the insured depository institution or any affiliate about:
1. Providing (or refraining from providing) written or oral comments or testimony to any Federal banking agency concerning the adequacy of the performance under the CRA of the insured depository institution, any affiliated insured depository institution, or any CRA affiliate;
2. Providing (or refraining from providing) written comments to the insured depository institution that concern the adequacy of the institution’s performance under the CRA and must be included in the institution’s CRA public file; or
3. The adequacy of the performance under the CRA of the insured depository institution, any affiliated insured depository institution, or any CRA affiliate.

Examples of actions that are CRA communications may be found in §346.3(c)(1), and examples of actions that are not CRA communication may be found in §346.3(c)(2).

"Fulfillment of the CRA" Factors that are in fulfillment of the CRA:

1. Comments to a Federal banking agency or included in CRA public file – Providing or refraining from providing written or oral comments or testimony to any Federal banking agency concerning the performance under the CRA of an insured depository institution or CRA affiliate that is a party to the agreement or an affiliate of a party to the agreement or written comments that are required to be included in the CRA public file of any such insured depository institution; or
2. Activities given favorable CRA consideration – Performing any of the following activities if the activity is of the type that is likely to receive favorable consideration by a Federal banking agency in evaluating the performance under the CRA of the insured depository institution that is a party to the agreement or an affiliate of a party to the agreement:
1. Home-purchase, home-improvement, small business, small farm, community development, and consumer lending, as described in 12 CFR 345.22 of the CRA regulations, including loan purchases, loan commitments, and letters of credit;
2. Making investments, deposits, or grants, or acquiring membership shares, that have as their primary purpose community development, as described in 12 CFR 345.23 of the CRA regulations;
3. Delivering retail banking services, as described in 12 CFR 345.24(d) of the CRA regulations;
4. Providing community development services, as described in 12 CFR 345.24(e) of the CRA regulations;
5. In the case of a wholesale or limited-purpose insured depository institution, community development lending, including originating and purchasing loans and making loan commitments and letters of credit, making qualified investments, or providing community development services, as described in 12 CFR 345.25(c) of the CRA regulations;
6. In the case of a small insured depository institution, any lending or other activity described in 12 CFR 345.26(a) of the CRA regulations; or
7. In the case of an insured depository institution that is evaluated on the basis of a strategic plan, any element of the strategic plan, as described in 12 CFR 345.27(f) of the CRA regulations.

"Insured Depository Institution" means any bank or savings associations whose deposits are insured by the FDIC and includes any uninsured branch or agency of a foreign bank or a commercial lending company owned or controlled by a foreign bank for purpose of Section 8 of the FDI Act.

"NGEP" A nongovernmental entity or person (NGEP) is any partnership, association, trust, joint venture, joint stock company, corporation, limited liability corporation, company, firm, society, other organization, or individual.

A "NGEP" does not include:

1. the United States government, a state government, a unit of local government (including a county, city, town, township, parish, village, or other general-purpose subdivision of a state) or an Indian tribe or tribal organization established under federal, state or Indian tribal law (including the Department of Hawaiian Home Lands), or a department, agency, or instrumentality of any such entity;
2. a federally chartered public corporation that receives federal funds appropriated specifically for that corporation;
3. an insured depository institution or affiliate of an insured depository institution; or
4. an officer, director, employee, or representative (acting in his or her capacity as an officer, director, employee, or representative) of the above mentioned entities.

The "Relevant Supervisory Agency" for a covered agreement means the appropriate federal banking agency for:

1. each insured depository institution (or subsidiary thereof) that is a party to the covered agreement;
2. each insured depository institution (or subsidiary thereof) or CRA affiliate that makes payments or loans or provides services that are subject to the covered agreement; and
3. any company (other than an insured depository institution or subsidiary thereof) that is a party to the covered agreement.

Disclosure and Reporting of CRA — Related Agreements Examination Objective
To determine whether the institution: 1) is aware of its responsibilities under section 48 of the FDI Act and the implementing CRA Sunshine Regulation; 2) has identified any written agreements that would trigger the section 48 requirements; and 3) discloses covered agreements and files annual reports as required by the regulation.

Examination Procedures

1. Determine whether the institution can appropriately identify any written contract, arrangement, or understanding covered under the CRA Sunshine Regulation.
2. With regard to covered agreements that the institution has identified, determine whether the institution discloses covered agreements to the public and the relevant supervisory agency in a timely manner and files annual reports relating to covered agreements in a timely manner.
3. Require appropriate corrective action.
4. Document findings.

References
The Consumer Compliance Task Force of the Federal Financial Institutions Examination Council (FFIEC) promotes consistency in the implementation of the CRA Regulation by periodically publishing Interagency Questions and Answers, Interagency Interpretive Letters, Examination Procedures, and by facilitating uniform data reporting. The FDIC also issues separate guidance aimed at enhancing examination processes and the quality of public evaluations.

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Statute: Community Investment Act, 12 USC 2901
(http://www.fdic.gov/regulations/community/ community/12c30.html)

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Regulation: Community Investment Act, 12 CFR Part 345
http://www.fdic.gov/regulations/laws/rules/2000-6500.html

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Preamble to the 1995 CRA Regulation
http://www.fdic.gov/regulations/community/community/crapreamb.txt

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Technical Changes to CRA Regulations to conform with OMB and Census Changes
http://www.fdic.gov/regulations/laws/federal/04joint78.html

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Preamble to the 2005 Regulation Change
http://www.fdic.gov/news/news/financial/2005/fil7905a.html

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2001 Interagency Questions and Answers
http://www.ffiec.gov/cra/pdf/qa01.pdf; http://www.ffiec.gov/cra/doc/ffiec_qa01.doc);

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2006 Interagency Questions and Answers
http://www.ffiec.gov/cra/pdf/06-2188.pdf

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Consolidated Guidance for Preparing CRA Examinations and Performance Evaluations
http://fdic01/division/dsc/cra/guidance/part1.html#summary

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CRA Amendments in the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA)
http://www.fdic.gov/regulations/compliance/manual/part4/p4h-d.pdf

CRA Interpretive Letters

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FFIEC CRA Interpretive Letters
www.ffiec.gov/cra/letters.htm

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CRA Qualified Investment Fund
http://fdic01/division/dsc/cra/tools/CohenQA.doc

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Qualified Zone Academy Bonds (QZAB) Letter
http://fdic01/division/dsc/cra/tools/QZABProgram.doc

CRA-Related Memoranda
Examination Related

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DSC RD Memo 03-002: Rescission of Outdated and Superceded CRA Directives in Conjunction with Issuance of Consolidated Guidance for Preparing CRA Examinations and Performance Evaluations
http://fdic01/division/dsc/memos/memos/6000/03-002.pdf

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DSC RD Memo 03-037: Revised Small Bank CRA Loan Sampling
http://fdic01/division/dsc/memos/memos/6000/03-037.pdf

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DSC RD Memo 05-046: CRA Consideration of Activities that Revitalize or Stabilize Areas Affected by Hurricanes Katrina and Rita
http://fdic01/division/dsc/memos/memos/6000/05-046.pdf

Special Situations/Designations

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DCA RD Memo 98-016: Processing Applications Using Community Reinvestment Act and Compliance Examinations and Related Information
http://fdic01/division/dsc/memos/memos/direct/6200-1.pdf

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DCA RD Memo 99-012: Special Purpose Bank Guidance
http://fdic01/division/dsc/memos/memos/direct/6456-13.pdf

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DSC RD Memo 05-008: Procedures for Processing Request for Wholesale and Limited Purpose Institution Designations and Strategic Plan Approvals under the CRA
http://fdic01/division/dsc/memos/memos/6000/2005-008.pdf

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DSC RD Memo 06-001: Hurricane Katrina Guidance
http://fdic01/division/dsc/memos/memos/6000/06-001.pdf

CRA-Related Financial Institution Letters (FIL)

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FIL 35-95: Revised Regulation Implementing the Community Reinvestment Act (Part 345); Revision to Regulation C
http://www.fdic.gov/news/news/financial/1995/fil9535.html

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FIL 87-95: Technical Amendments to Correct and Clarify New Rules Implementing the Community Reinvestment Act (Part 345,)
http://www.fdic.gov/news/news/financial/1995/fil9587.html

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FIL 3-96: Designations as Wholesale or Limited Purpose Institutions; Submissions of Strategic Plans
http://www.fdic.gov/news/news/financial/1996/fil9603.html

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FIL 26-98: Guidelines for Strategic Plan Submissions
http://www.fdic.gov/news/news/financial/1998/fil9826.html

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FIL 10-2001: Final Rule on the Disclosure and Reporting of Community Reinvestment Act-Related Agreements http://www.fdic.gov/news/news/financial/2001/fil0110.html

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FIL 64-2001: Revised and New Interagency Questions and Answers Regarding Community Reinvestment
http://www.fdic.gov/news/news/inactivefinancial/2001/fil0164.html

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FIL 21-2005: Community Reinvestment Act Joint Notice of Proposed Rulemaking
http://www.fdic.gov/news/news/financial/2005/fil2105.html

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FIL 29-2005: Final Technical Amendments to CRA Regulations
http://www.fdic.gov/news/news/financial/2005/fil2905.html

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FIL 79-2005: Community Reinvestment Act: Joint Final Rules
http://www.fdic.gov/news/news/financial/2005/fil7905.html

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FIL 23-2006: Community Reinvestment Act: New Interagency Questions and Answers
http://www.fdic.gov/news/news/financial/2006/fil06023.html

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FIL 33-2006: Community Reinvestment Act: Interagency Examination Procedures
http://www.fdic.gov/news/news/financial/2006/fil06033.html

Job Aids

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FFIEC CRA Website: About CRA, How to File, Public Data
http://www.ffiec.gov/cra/default.htm

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CRA Wiz/MAPPS
http://fdic01/division/dsc/cra/CRAWiz/index.html

CRA Large Bank Core Tables

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Sample Core Tables
http://fdic01/division/dsc/memos/memos/direct/globals/CoreTables/ExampleFMB.doc

"How To" Technical Guide,
http://fdic01/division/dsc/cra/guidance/part3.html, and

FFIEC Interagency Core CRA Public Evaluation Tables Examiner Guidance
http://fdic01/division/dsc/cra/guidance/part2.html

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Community Contacts Database
http://s00iis103/ccav2/ and User Guide
http://s00iis103/ccav2/Help/CCUSersGuide.doc

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CRA Performance Ratings
(FFIEC http://www.ffiec.gov/craratings/default.aspx and FDIC www2.fdic.gov/crapes)

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CRA Examination Schedule (FDIC)
www.fdic.gov/regulations/community/exam/index.html

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A Guide to CRA Data Collection and Reporting
http://www.ffiec.gov/cra/guide.htm

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All state member banks, state nonmember banks, national banks, and savings associations, except small institutions, are subject to data collection and reporting requirements. A small institution is a bank or thrift that, as of December 31 of either of the prior two calendar years, had total assets of less than $1 billion. 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, reporting in electronic format: 1) a transmittal sheet, 2) a definition of its assessment area(s), and 3) a record of its Community Development (CD) loans. In addition, any institution that wants to be evaluated under the Large Bank evaluation method must also collect and report CRA loan data.

Using the loan data submitted by the financial institutions, the Federal Financial Institutions Examination Council (FFIEC) creates aggregate and disclosure reports for each metropolitan area (MA). These reports are made available to the public each summer. The MA aggregate and disclosure reports for calendar years since 1996 are available on the FFIEC’s CRA web site at http://www.ffiec.gov/cra. The FFIEC also provides to the public various electronic, paper and magnetic media items.

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Approved CRA Wholesale and Limited Purpose Banks, Banks Operating Under Strategic Plans, and Special Purpose Banks
http://www.fdic.gov/regulations/community/community/apprlp.html

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Applications Subject to CRA and Public Comments
http://www2.fdic.gov/cra/

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Census Information: Available from the FFIEC CRA website Census Data Counties Located in Non-Metro Areas Listing HUD Estimated Metropolitan Area Median Family Income Listing
http://www.ffiec.gov/cra/censusproducts.htm#censusdata

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Recon
http://wasiis102p/recon/index.asp

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FFIEC Geocoding/Mapping System:
http://www.ffiec.gov/cra/geocode.htm

A web-based tool designed to help institutions report information on mortgage, business, and farm loans. Geocoding refers to the Metropolitan Statistical Area (MSA), State, County, Census Tract combination (address information) that must be provided for each reported loan. The system allows institutions to enter a street address, and it then determines the census tract. When an address is not found, the mapping feature enables the user to determine the property location based on known landmarks, without resorting to a paper map. The system also provides Census demographic information about a particular census tract, including income, population, and housing data. Institutions use this information to assess whether they are meeting the credit needs of the communities in which they operate.

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OMB Bulletin No. 03-04: June 2003 changes in Metropolitan Statistical Area (MSA) boundaries and terminology
http://www.whitehouse.gov/omb/bulletins/b03-04_attach.pdf

• A five-digit MSA code from the new list of MSAs is to be used for 2004 CRA data. Use the five-digit code for Metropolitan Divisions when available.
• A four-digit MSA code from the old list of MSAs is to be used for 2003 CRA data.

This section provides information and procedures for conducting community contact interviews. It broadly addresses a wide variety of subjects to accommodate varying communities and types of institutions. As a result, it is NOT meant to be used in the order presented. Examiners should select those steps and procedures that apply to the unique circumstances of the institution and/or the community.

Objectives
The primary objectives of conducting interviews with local community contacts are to:

• Gather information that might assist in the development of a community profile.
• Determine opportunities for participation by financial institutions in helping to meet local credit needs.
• Understand perceptions on the performance of financial institutions in helping meet local credit needs.
• Provide a context on the community to assist in the evaluation of an institution’s CRA performance.

General Guidelines
Coverage and Frequency of Community Contacts
Community contacts typically take the form of personal meetings. Telephone conversations or larger group meetings are permitted as necessary and appropriate. Information from community contacts made by other financial regulatory agencies is maintained in the FDIC’s Community Contact Database.

In conjunction with each examination, the FDIC will conduct community contacts in the MSA, county or assessment area(s) that the financial institution in question is serving. Where possible, those community contacts should be conducted early in the examination to help to provide information on the community to assist the examiner in the evaluation of the performance context.

Selection of Community Contacts
The number and nature of contacts will depend upon a variety of factors, including the:

• Complexity of the community.
• Size and type of the institution examined.
• Amount and age of community driven information already available to the examiner.

Treatment of Confidential Information
Confidentiality of Institution Records
Examiners must maintain the confidentiality of any institution’s proprietary information. When making community contacts, the examiner should not reveal any confidential information obtained from the institution’s files or through discussions with management, or any conclusions drawn about the institution’s performance or CRA rating.

Protection of Community Contacts
Maintaining the confidentiality of the community contact’s identity, when requested to do so, is essential. Examiners must not reveal the name or other identifying information about a community contact to anyone outside the agency without the contact’s express permission, either written or verbal, to do so. Notwithstanding the confidentiality treatment, all community contact forms are shared with the federal financial regulatory agencies.

Compliance Report of Examination and CRA Performance Evaluation
Reporting CRA data
Include in the Compliance Report of Examination and the CRA Performance Evaluation, as appropriate, a discussion of the number and kinds of CRA-related community contacts that were performed and relevant information obtained and used, if any, in the CRA evaluation.

NOTE: Information should be factual. While opinions of contacts may be included when applicable, examiners should refrain from drawing conclusions or making judgements based solely on anecdotal evidence.

Sharing Information
Information Sharing Process
The agencies routinely share information obtained during outreach contacts.

Whenever community contacts are made, the examiner initiating the contact should complete the Community Contact Form in the Community Contact Database and submit it according to Regional Office Policy.

Preparation for the Interview
Before conducting interviews, review relevant background information to identify additional areas of inquiry.

Adequate preparation for the interviews includes:

• Reviewing information on the assessment area(s);
• Selecting community contacts; and
• Structuring the interview.

Review of Information on Assessment Area(s)
A review of all available background materials prior to the community contact process is vital in developing a working understanding of the community you are about to enter. The nature, extent and age of the information available prior to conducting community contacts influences your objectives for the community contact process. A well developed context also allows for more detailed and in-depth community contact interviews.

Review Process
The examiner should do the following:

1. Assess prevailing economic conditions and demographic characteristics within and near the assessment area(s). This includes a review of available data on:
• Various population segments within the community;
• Trends in migration;
• Labor and employment characteristics;
• Comparisons to state and county/MSA data; and
• Housing and real estate market statistics.
2. Assess infrastructural and geographic characteristics within the assessment area(s).

   This includes a review of:

   • Maps;
   • Natural areas;
   • Major thoroughfares;
   • Access to public transportation;
   • Locations of low- and moderate-income census tracts;
   • Names of specific low- and moderate-income neighborhoods; and
   • Proximity of the assessment area(s) to military bases, airport facilities, and metropolitan centers.

   TIP: Internal mapping software, information from the financial institution, and information from local planning, transportation, economic development or real estate boards are good sources for possible information.

3. Assess distribution and availability of branch and ATM services especially with regard to low-income areas within the community. Include a review of check cashing facilities, if possible.

   TIP: Internal mapping software, if available, can allow the examiner to map these locations.

4. Assess, to the extent information is available, local development issues and priorities in the areas of:
   
   • Affordable housing;
   • Commercial activity; and
   • Economic and community development.

   A summary of such information may be available from the Community Affairs staff.

5. In addition, the examiner may wish to review previous community contacts for the locality including those from other regulatory agencies.
6. If the examiner is reviewing an MSA, he or she should contact the city’s municipality and obtain a copy of its Consolidated Plan ("Conplans"). Conplans list the needs of an MSA as identified and prioritized by its officials.
7. The examiner may also consider obtaining public reports from Multiple Listings Services (MLS) and news articles on local development projects.

Quantitative sources may include:

• Feasibility studies;
• Market analysis; and
• Commercial appraisal reports for local development projects.

TIP: State or local economic development agencies, utility companies, real estate organizations, and universities present in the immediate or surrounding area are often good sources for such material. Refer to the topic "Identify Potential Community Contacts" for additional potential sources for these types of material.

8. Determine the priorities of the community and the opportunities for financial institutions to participate with local governmental and non-profit organizations in the areas of:
   
   • Affordable housing;
   • Small business/farm development; and
   • Economic and community development.
     
9. Review the number and nature of government agencies, non-profit and neighborhood organizations that provide programs and resources to the assessment area(s) for these purposes.

   TIP: Sources of information for this step include prior community contacts in the area, information on local programs from the institution, and discussions with appropriate agency staff.

10. Based upon information reviewed above, identify areas that require further inquiry through the community contacts process.
    
    For example:
    
    • Are there any significant conflicting pieces of information that may require further investigation in the contact interviews?
    • Are there any pieces of quantitative information, such as housing and rental values, that are considerably outdated and need to be verified in the contact interviews?
    • Does the data suggest particular areas of "need" in affordable housing, such as housing rehabilitation, multifamily development or single family home purchase that you can investigate further and verify through the contact interviews? Or alternatively, are needs for specific areas of the population, such as housing for the elderly, still unclear and therefore require further study through the contact interviews?
    • Does the data suggest particular areas of need in services such as ATMs, branches, bilingual services that can be investigated further and verified through the contact interviews?
    • Does the review identify organizations or projects requiring additional information?

Identify Potential Community Contacts
This section discusses the number and types of community contacts that should be made during an examination. It also identifies potential community contacts and provides guidance on the sources of information that are available from them.

Number and Type of Contacts
Identification Process

1. Select contacts that can best provide information on the assessment area(s).
2. Consider the nature of the information you are seeking to complete your analysis of the assessment area(s) and the purpose of the organizations in the assessment area(s).

TIP: Examiners may wish to initially consult or select organizations on the telephone to determine which can best comment on particular issues

3. Consider the following factors when determining the appropriate number of contacts to make:
   • The nature of any information provided by the institution including information that specifies credit, service or community development needs in the institution’s assessment area(s);
   • The nature of public comments including information that specifies credit, service or community development needs in the institution’s assessment area(s);
   • The amount of community contact information available from other examinations conducted for this area, both in number and substance, and the date the information was gathered;
   • The complexity of the community including the size of its population, its geographic breadth, and the diversity of its population; and
   • The characteristics of the institution examined.

NOTE: Time constraints can limit the number of contacts that the examiner is able to conduct.

Organization Types
Grassroots Community Groups
Grassroots groups are formed when concerned individuals come together to solve common problems. Groups whose primary aim is to further the objectives of low-income residents are of particular interest. These groups can be difficult to identify because they tend to be smaller neighborhood groups and may not have readily recognizable names.

However, they will often share the following characteristics:

• Low-income representation is evident in policy and implementation aspects of the organization. This may be evident at the board level, in the committee structure, or the day-to-day management;
• Input from low-income residents is clearly sought in functional/program aspects and, information distribution to low-income individuals is a priority. Examples of this include door-to-door surveys and frequent neighborhood meetings; and
• Low-income individuals are encouraged or empowered to solve problems collectively.

Grassroots community groups include the following types of organizations:

• Churches;
• Block clubs;
• Tenants association;
• Low-income advocacy groups;
• Housing or credit counseling programs;
• Senior citizen groups;
• Shelter providers;
• Health clinics; and
• Community network/collaborative groups.

The following types of information are available from these sources:

• Development priorities and concerns of the local lowincome populations;
• Available development programs and resources;
• Current partnerships and/or development projects in the area; and
• The role of financial institutions in the assessment area(s).

Secondary information available includes completed questionnaires or surveys.

TIP: School boards can update census information by providing demographic information on the makeup of their student body. This information is typically collected annually.

Community-Based Development or Financial Intermediaries
The primary aim of these organizations is typically to increase the economic standard of low-income individuals or areas. Thus they tend to be involved in technical aspects of development such as residential and commercial real estate ventures or financing. Though these groups encourage representation of low-income individuals, they are also likely to have a higher degree of staff or decision-makers that live outside of low-income areas that the organization is serving.

Community-based development or financial intermediaries include the following types of organizations:

• Non-profit organizations such as Community Development Corporations (CDCs);
• Church-based economic development programs;
• Community loan funds;
• Small Business Investment Corporations (SBICs);
• Specialized Small Business Investment Corporations (SSBICs);
• Low-income housing organizations;
• Technical assistance providers;
• Low-income credit unions;
• Development institutions; and
• Micro-enterprise groups.

Available from these sources are the following types of information:

• Low-income credit;
• Service and community development issues at the neighborhood level;
• Quantitative information on housing values and actual real estate projects;
• Qualitative information on financial institutions and financial practices of low-income individuals;
• Technical details on financing and lending mechanisms for programs they offer; and
• Information on other government and program resources or ventures in the community.

Secondary information available includes:

• Feasibility studies;
• Appraisal information on specific neighborhoods;
• Local needs assessments;
• Surveys of institution’s activities;
• Surveys of financial practices of low-income clientele; and
• Lending agreements by groups of local financial institutions.

Government Offices
Government offices include the following types of organizations:

• Local branches of Federal agencies, such as:
  • Department of Housing and Urban Development (HUD);
  • Small Business Administration (SBA);
  • Department of Commerce;
  • Economic Development Administration (EDA);
  • Farmers Home Administration (FmHA);
  • Bureau of Indian Affairs (BIA); and
  • U.S. Department of Agriculture (USDA).
• Local groups of federally funded or mandated programs, such as:
  • Community Action Agencies (CAAs);
  • Neighborhood revitalization programs; and
  • Office of Minority Business Enterprise (OMBE)’s business development centers.
• Local elected officials, such as:
  • Mayors;
  • Commissioners;
  • Tribal chiefs;
  • City council members; and
  • Tribal council members.
• State and local housing agencies or authorities
• Economic development agencies, such as:
  • Industrial and redevelopment agencies or authorities;
  • County or regional planning agencies;
  • Transportation agencies;
  • Utility companies;
  • Rural electric cooperatives;
  • Economic Development Corporations (EDCs);
  • Local planning or economic development directors; and
  • School board superintendent and officials.

Available from government offices are the following types of information:

• Loan, grant, guarantee or other programs available for use by institutions and housing, community, and economic development groups;
• Amount of funding available through such programs in the institution’s assessment area(s);
• Extent to which local financial institutions participate in such programs and perspectives on barriers or issues related to their participation;
• Specific project opportunities in which institutions could participate; and
• Information on underserved neighborhoods or areas.

Secondary information available includes:

• Housing, small business, agriculture and general economic conditions and trends in the assessment area(s);
• Publicly sponsored comprehensive or general development and redevelopment plans and maps; and
• Other plans and studies, such as housing plans (for example, the Consolidated Plan), economic development plans and studies, and various community service needs in the assessment area(s).

Business and Labor Groups
Business and labor groups include the following types of organizations:

• Chambers of commerce;
• Downtown and neighborhood merchants associations;
• Small and minority business advocacy groups;
• Realtors;
• Minority and non-minority real estate agents;
• Local venture capital companies;
• SBA/college-supported Small Business Development Centers (SBDCs);
• Feed stores;
• Cattlemen’s associations;
• Actual small business owners; and
• Small business technical assistance providers, such as business incubators and local union representatives.

Available from these sources are the following types of information:

• Data and perspectives on local business, economic conditions, recent economic activity and trends in the community;
• Nature and extent of small business activity, level of referrals from financial institutions to SBDCs;
• The existence of active SBA 504 programs, SBIC or SSBIC programs;
• Perspectives on financial institution efforts to provide financing and services to small businesses/small farms;
• The level of institution participation in other public/private programs for small business development and employment training; and
• Other private and public sources of financing available for small businesses and small farms in the assessment area(s).

Secondary information available includes mortgage interest rate sheets from financial institutions or mortgage companies obtained from realtors.

Civil Rights and Consumer Protection Groups
Civil rights and consumer protection groups include the following types of organizations:

• Open housing/fair housing organizations;
• Local chapters of the National Association for the Advancement of Colored People ( NAACP), Urban League, Urban Coalition, and National Organization for Women;
• Legal aid/legal services offices;
• Human relations commissions;
• State attorney general; and
• Consumer protection office.

Available from these sources are the following types of information:

• Credit needs;
• Issues or priorities for any protected classes;
• Complaints against specific financial institutions; and
• General perspectives on financial institutions in the assessment area(s).

Secondary information available includes studies using testers in financial institutions, formal complaints or case write ups.

Other Potential Contacts
The following types of organizations can also provide information:

• Universities;
• Research institutions;
• Foundations; and
• Hospitals or hospital extension programs.

The types of information available from these sources are many and varied. Specific community projects by universities or hospitals may be involved.

Secondary information available includes:

• Demographic and economic data;
• Independent research studies or reports on community development topics;
• Studies and data collection on development and economic trends or opportunities in the area; and
• Automated "Conplans" may also be available.

Conducting the Interview
Having determined the groups and/or individuals to be contacted and the information to be solicited from each interview, the examiner must then plan the structure and content of questions prior to the interview. This section provides a sample list of questions that the examiner may wish to consider. The examiner should select and tailor questions from the list of sample questions that would be the most effective for each specific contact.

The questions highlight the type of information that the examiner is seeking through the community contact process. They are meant to serve as a guide to assist the examiner in planning the substance and structure of the interview. Obviously, not all questions will be appropriate to each specific contact. The list is not all inclusive; particular questions may generate significant discussions and examiners are expected to probe and conduct follow-up questions appropriately. Examiners are encouraged to review the entire list before structuring their interview. As examiners gain experience, they are encouraged to engage in discussion with the community contact and not undertake a "question and answer" format.

Background Information on Community Contact Obtain Background Information
General:

1. The examiner should ascertain the organization’s area of expertise and the role that it plays in the community. The following questions apply.
   • What geographic areas does the organization serve?
   • How old is the organization? How was it started? How much involvement by local residents and/or low-income residents was there initially?
   • Who does the organization represent? Roughly what percentage of your client base is very low- (defined as 25-50% of median area income), low-, moderate- or middle-income?
   • What is the mission and the primary goals of this organization? What are the goals for this year?
   • Is there a Board of Directors? What is the representation on the Board? Are there low-income neighborhood residents on the Board? Are banks/ lenders or other financial institutions on the Board?
   • What projects or programs are you currently working on? Aside from programs are there other means in which the mission is carried out?
   • How many "clients" does this organization serve on a monthly or annual basis? If the organization is involved in development, how many real estate projects have been completed in the organization’s history? How many are on-going?
   • If direct loans have been provided through any programs, what type of loans are they? What segments of the community have benefited from these loans (low-, very low-, moderate-income, elderly, etc.)? What is the number and dollar volume of loans generated?
   • What are the amounts and sources of the organization’s funding? How is the funding disbursed (for example, what activities does it fund and how much of the budget is devoted to each activity)?
   • Could you list the organization’s major accomplishments in the past 5 years? Is there such a list that you may have for purposes of your funders or funding proposals that I may have a copy of?
   • What are some of the limits the organization is facing in serving its community? In what areas is it currently encountering opportunity?
   • Is the organization interested in expanding its program or project areas at this time? In what area? Is there a time-line in place to implement these activities or expected to be in place?

Specific to economic development agencies (including utility companies):

• Are there empowerment zones (EZs), enterprise communities (ECs), or Foreign Trade Zones (FTZs) in your area? Where? What types of monetary incentives are offered?
• What are examples of small business, small farm, and community-based development that the agency has been involved in? Has activity been concentrated in a few areas? Which ones?
• Does the economic development agency also coordinate the housing program and monies for this jurisdiction? If not, is economic development coordinated with housing officials? What priority is accorded to affordable housing? What priorities, if any, are accorded to specific population segments (e.g., elderly, special assistance, female heads of households, homeless, other)?
• Are the economic development strategies or the availability of the programs communicated to local residents in any way? How?

  NOTE to Examiner: Did you find that local residents or community representatives were able to articulate strategies or various programs?

• Does the agency have working relationships established with community organizations at the neighborhood level? Who? What are the names of the individuals that the agency has worked with? If so, what is the extent of the partnership that has been established?

Specific to local government:

• What is the structure of the local government? Is there an economic development department? Is this separate from housing development?
• Which department has responsibility for economic development policy?
• Does the local government have programs that target affordable housing, small business development and/or community development projects? How much funding do they have?
• Has the local government identified priorities for its housing and economic development funds? Has the government determined what impact this will have for the population (for example, for the elderly, low-income families, individuals with special needs, the homeless)? To the agency’s knowledge, what has been the impact of its funds in the last several years?
• How much money has been allocated for affordable housing, elderly needs, special needs, etc.? What is the time frame for the disbursement of funds, particularly Community Development Block Grant (CDBG) funds?

Specific to real estate brokers:

• Do you have brokers who specialize in low- or moderate-income housing (single or multifamily)?

Obtaining a Community Profile
One of the primary objectives of the contact process is to update the community profile.

Update the Community Profile

1. The examiner is expected to obtain and update information on current economic conditions and trends, current demographic characteristics and existing credit needs. The following questions apply.
   
   General:

• What is the current demographic makeup of the community? What were the most significant demographic changes in the past five to ten years, if any (for example, migration patterns, racial composition)?
• Which neighborhoods are in transition, if any? Has gentrification or the displacement of low- or moderate-income individuals become an issue in certain neighborhoods? In which neighborhoods? Is the potential displacement of individuals being managed in some process, for example, a relocation package? If so, how and who is involved?
• What major employers have either entered or left the community in the last few years? Has this impacted certain categories of the labor market and not others? If so, who was positively impacted? Negatively? How?
• Who or what organizations are the driving forces in the community (examples include churches, government, community groups, etc.)?
• What priorities have you identified for this area?
• Have you conducted any studies (for example, neighborhood surveys or feasibility studies) that may provide insight into local credit, service or community development needs? What were the results? (Obtain a copy, if available.) How was the study used and what was the distribution (any banks included)?
• Do zoning restrictions play a role in the availability of affordable housing units? How? Which neighborhoods are most impacted?
• Are absentee landlords a problem? For whom? In which neighborhoods?
• In your opinion, what credit needs have not been adequately satisfied by area financial institutions? (Give example: small business loans, home improvement loans, installment loans, etc.)
• To what extent are financial services available in the assessment area(s)? What is the availability of ATMs or branches in this neighborhood?
• Are there many women- or minority-owned businesses in the area? If so, are they concentrated in any geographic location or occupational field?

Specific to community-based organizations:

• Does this community have a significant number of people that would be "uncounted" in official Census figures? If so, why? Does your organization give estimates of the uncounted or real population?
• What are the primary and secondary issues that low-income people in this area are concerned with in the short term? Long term?
• What are the most pressing concerns (for example, adequate housing, access to retail goods, adequate public transportation facilities, adult education, training and placement, English as a Second Language (ESL), health facilities) that you have been able identify facing low-income residents?
• What language(s) are spoken in the community?


Specific to economic development agencies (including utility companies):

TIP: Economic development agencies typically operate at the county or MSA level. Using follow-up questions and probing techniques, attempt to get as local an assessment as possible.

• What are the primary economic strengths of this area? Primary weaknesses?
• Are there development plans currently underway for infrastructure related projects such as bridges, sewers, etc.? If so, what is the suggested time table? Will the project generate or is it generating jobs for low- or moderate-income residents?
• What are the main economic development strategies (examples include: business attraction, business retention, marketing, small business development, etc.) that you are currently pursuing for the overall county or MSA? For a particular neighborhood? What priority is given to small business, small farm, and communitybased development (such as grocery stores, day care facilities, etc.)?

Specific to housing organizations (state, local, etc.):

• What is the waiting list for various affordable housing programs in the area?
• Have you received complaints from tenants that buildings are not in compliance with local building codes? In your perception, how widespread is this problem?
• What is the nature of demand for affordable housing? How does this compare to available housing stock, both in terms of number of units and types of units?
• How would you rate the need for housing among various sectors of the community, such as the elderly, individuals on special assistance, female heads of households, the homeless, others?
• Are there structural inadequacies in the type of housing stock available for low-income populations in this area? Is housing rehabilitation a priority issue amongst those your organization has identified?

Specific to real estate brokers:

• (Refer to specific geographic areas) What are the current economic conditions in this general area? Are housing values going up or down? If it is an "up" market, what are some of the forces contributing to its success? If down, what are some of the issues contributing to its decline?
• Has there been any recent development activity in this area? What is the nature of the development (commercial, residential, affordable housing, public projects)? What has been the impact on the neighborhood?
• Are there mobile homes or concentrations of mobile homes, such as mobile parks, in any area?
• What is the average length of time that single family homes are on the market in this neighborhood?
• Other types of residences? Other neighborhoods?
• Do you know of any changes in the near future that would impact the market for residential/commercial properties in a specific area? What are these changes (political, environmental, legal, etc.)?
• Do you have copies of any appraisal reports for commercial and residential properties? For which areas (obtain, when possible)?
• Are you aware of appraisal-related problems in this neighborhood, such as the lack of comparables?
• What credit products do your customers typically use to purchase a home? Conventional mortgages? Government loans? Land contracts? Why?
• What are the various sources of financing that your customers typically use? Banks? Thrifts? Mortgage companies? Home improvement dealers? Credit unions? Employer-related sources (for example, GMAC)? Others? Are particular combinations of sources more typical than others?
• What are the characteristics of likely investors for multifamily housing properties in a specific neighborhood? What are the likely financial risks and rewards for investors in this area? (Compare with other neighborhoods.)

Specific to Foundations:

• What types of eligibility criteria are currently established for community development programs?
• Which organizations and projects do you fund? How much money is committed to these organizations and/or projects for this year?
• Out of the programs and/or organizations that you funded in this area, which are the most effective in the affordable housing area? In the small business development or community development area?

Assessing Opportunities for Financial Institution Participation
The degree to which financial institutions are involved in community development projects or services depends in some part on the extent of other resources and partners available within the community.

Examiners are expected to:

• Obtain information on the availability of resources dedicated to the local credit or development needs that have been identified; and
• Gauge the level of the contact’s efforts in approaching local financial institutions and the mechanisms of financing involved, if any.

In addition to any background materials reviewed in the preparation portion of the examination, contacts can provide relevant information on:

• The number and nature of community development or credit-related projects being developed for the benefit of the community;
• The number of organizations or government programs committed to those activities;
• The extent to which partnerships or other forms of coordination are evident in the area;
• The level of resources devoted to these activities; and
• How active these programs or resources are with respect to promoting the credit or banking needs that local representatives or residents have identified.

Assessing Opportunities for Participation
The following questions apply to:

Community-based organizations:

• Has your organization ever participated in activities, either formally or informally, with financial institutions? If so, which ones? For what projects or products? For what clients (for example, what were the income characteristics of those who benefited)?
• Does your organization partner with other groups, including religious organizations, government agencies and neighborhood organizations, in conducting any of its program activities?
• Tell me about any other organizations you work with in meeting your clients’ needs. What other organizations serve this community in the areas of affordable housing? Small business development? Commercial, day care or other community related facilities? Job training? Credit counseling? Low-income advocacy?
• Which of these organizations do you consider most active? If I wanted more information from them, whom should I contact?
• Which financial intermediaries do you consider particularly effective? Why?
• Are you seeking funds from local financial institutions for any current projects?
• What is the nature of the project? Is it a developmentbased product? Is it related to credit needs in the community? Is there a specific neighborhood or group of individuals that this project will benefit? How?
• What are the specific requirements for the financing that you are seeking?
• Are you aware of similar projects that other organizations are working on?
• What can you tell me about those? Who can I contact to learn more?

State and local economic development agencies, government agencies:

• What, if any, commercial development projects are underway? Where are they located? Are jobs created? Will low- or moderate-income individuals benefit? How?
• What are the number and nature of various economic development programs funded by the city or state? How many residents do these programs benefit annually?
• Which of these programs, if any, are designed to leverage funds from financial institutions? What are the mechanics of the program? How many projects have been funded to date? Which financial institutions have participated in these programs? Is there a particular area or group that these funds target?
• Do you have programs designed specifically for affordable housing or small business development? If so, how many small businesses and/or small farms benefit? What is your definition of small business?
• What are the funding levels of these programs? How many projects have been funded to date? Is there a particular neighborhood or group that these funds target? If so, what are they?
• Have any financial institutions participated in these programs? If so, which ones?
• Do you currently have other projects or have you had projects in the past that required either investment or other forms of financing from a financial institution? What are/were the characteristics of the project? Its financing? Include projects involving bond issuances, etc. What were the results? Innovative? Risky?
• What financing mechanisms are needed, planned or in place for any development or infrastructure related projects?

Real estate brokers:

• Do you know about local or state financing programs for affordable housing, small business or commercial development? How did you hear of these programs?
• Are there specific home insurance or financing programs that you utilize or to whom you refer customers? Which ones? Which do you utilize specifically for your low-income customers?
• Which financial institutions in the area are you aware of that access these programs? How actively? Which do not?

In addition, another function of the community contact process is to obtain feedback from the community on the performance of local financial institutions.

Obtaining Local Perspectives on the Performance of Financial Institutions
Obtain Feedback from the Community

1. The examiner is expected to gather information on the willingness and responsiveness of financial institutions, including the institution under examination, to work with local residents and professionals in meeting credit and community economic development needs.

The following questions apply.

General:

• With which banks, savings and loans, or mortgage companies have you been involved? What was the nature of your involvement?
• Has your organization ever participated in activities, either formally or informally, with financial institutions? If so, which ones? How did this professional relationship develop?
• What were the results of your involvement with financial institutions? In what ways has financial institution participation had a positive impact? In what ways has it had a negative impact? Probe for such project aspects as timing, financing terms, etc.
• Are local financial institutions pro-active in developing relationships or offering assistance? If so, which ones?
• What financial institution(s) does your group recommend to your constituents? Why?
• What obstacles, if any, prevent greater involvement from financial institutions in meeting local credit needs?
• Have you ever been invited by institutions to participate in institution-sponsored activities? If yes, specify the activities’ purpose and the role you played.
• Has your organization ever received complaints about individual institutions?
• Did the people affected know about the complaint process or were they informed about it?
• Did any of the complaints involve allegations that the institution(s) discouraged people from submitting an application? Did any complaints involve geographic or racial redlining, or any other forms of discrimination? What happened?
• Is anyone in your group or known to your group willing to offer specific evidence of discriminatory actions by specific institutions?

NOTE: If allegations of discrimination, discouragement or redlining are made with respect to an institution not regulated by your agency, forward the relevant information to the institution’s primary regulator.

• In your opinion, which institutions in the area have been particularly outstanding in meeting the community’s needs? Why? What, specifically, has been done by these institutions?
• In your opinion, which area institutions have been particularly notable for their unwillingness to respond to the community’s needs? Why?
• In your opinion, how well does [institution name] meet the credit needs of this community?

Community-based organizations:

• Have you discussed local credit needs with any financial institutions? What were the results?
• Do any institutions provide in-kind services, for example, loaned executives, etc.?
• What efforts are made to inform institutions and obtain their participation in the organization’s activities? Which institutions participate and to what degree? Which institutions, if any, declined to participate?
• If your organization works with government enhancement programs, do financial institutions work with you on that product? If so, which ones?
• What efforts have you employed to improve your organization’s relationship with any institutions? Which institutions? How successful have your efforts been?

Real estate brokers (be sure to include those operating in low- or moderate-income areas):

• Do you frequently work with financial institutions or other lenders that originate home mortgages?
• Which institutions do you receive rate sheets from on a consistent basis? How are they typically delivered to you?
• Are local lenders willing to work with you for first time home-buyers? If so, which ones? Why or why not?
• Are local lenders willing to work with you on exceptions on credit reports? If so, which ones? Why or why not?
• What knowledge, if any, do you have of credit standards being adjusted in either a preferential or discriminatory manner? Which lenders? What were the circumstances?
• Have you worked with lenders that have taken customers under the Fannie Mae 97% program? Freddie Mac? Others?
• Which lenders do not receive your referrals for home purchases and why? Which lenders do not receive your referrals for small businesses and why?
• What percentage of referred home buyers normally go to the recommended lenders?
• What percentage of referred home buyers normally get loans from recommended lenders?
• What other methods could be used to increase the use of insured financial institutions by people in your market area? In particular, are some financial institutions attracting portions of the market and not others? For which products?
• Do women or minorities have more difficulty than men in obtaining mortgage loans? If so, why?
• Which institutions are perceived as not meeting the needs of women or minority applicants?
• Are there outreach activities by particular institutions for women or minority customers? Do you perceive these programs as positive?
• In your experience, are there certain institutions favored in the minority and/or women’s business community?

Business, labor or consumer groups working with the women or minority business community:

• What is the general perception of financial institutions in the minority business community? In the women’s business community? Why?
• Do any financial institutions have a small business department targeting to women or minorities? Which ones? How is it done?
• Which institutions have separate minority or small business counseling services? Do the counselors also have lending authority?

Use of the Community Contact Form
Examiners should summarize each interview they conduct on the Community Contact Form within the Community Contact Database of the FDIC’s Intranet. The purpose of this form is to provide a consistent means by which financial institution regulators can share information obtained through interviews for a particular community. The individual conducting the interview should inform the interviewee that this information will be shared with other regulatory agencies.

This section provides sampling guidelines to assist examiners in selecting a sample of loans for review for CRA.

General Sampling Guidelines
Based on loan sampling, examiners should estimate three sets of proportions in connection with CRA examinations of small institutions:

• Loans inside and outside an institution’s assessment area(s);
• Loans in low-, moderate-, middle-, and upper-income geographies in an assessment area; and
• Loans to low-, moderate-, middle-, and upper-income borrowers within an assessment area and/or loans to small businesses/farms of different sizes within an assessment area.

Examiners should analyze the results based on the performance context and other information obtained during the examination.

Small institutions (including intermediate small banks) are not required to collect data for CRA examination purposes. However, some small institutions may choose to provide data regarding their loans, including the census tract locations and borrower incomes, similar to the data requirement for large institutions. Some institutions may even provide a summary of their distribution of loans. In this case, if the examiner is able to verify the institution’s information, the examiner may use the data supplied by the institution and will not need to perform sampling to evaluate the institution’s CRA performance.

These sampling procedures may also be utilized at large institutions if data have not been collected for some reason. For example, if a large institution has chosen not to collect consumer loan information, yet it comprises a substantial portion of lending, an examiner may choose to review consumer loans. In this case, these sampling guidelines would apply.

Statistical Sampling at Small Institutions

• Determine major product lines from which to select a sample, taking into account factors such as the institution’s business strategy and its areas of expertise. As an initial matter, examiners may select for review from among the same categories of loans that are to be used when reviewing large institutions (for example, home mortgages, small business and small farm loans, and consumer loans).
• Determine the universe of loans for each category.
  NOTE: The universe of loans is defined as the total number of loans, both originated and purchased by the institution, for a major product category.
  In order to determine the number of loans for the sample (known as the sample size), examiners should know the number of loans in the universe.
  This universe can be defined as any of the following:
  • Total number of loans since the previous examination;
  • Total number of loans in the previous year; or
  • Total number of loans in the previous six months .

  At a minimum, the universe of loans should cover at least the activity in the six months prior to the start of the examination.

• Determine the number of loans to be sampled for each product category by using the Sample Size Table. The table indicates the sample size based on the universe of loans for each product and the desired confidence and precision levels.
• Initially, examiners should select samples based on a 90% confidence interval, with a level of precision of plus or minus 15 percentage points. This means that there is a 90% chance that the results from the sample will be within 15 percentage points of the true proportion, for whichever criterion is being evaluated.
• For loan products or institutions that require further investigation or are undergoing greater scrutiny for any reason, a larger sample may be necessary because examiners may need results with a higher degree of reliability. Examiners may use the 90% confidence level with a level of precision of plus or minus 10 percentage points when a larger sample is necessary. Examiners should use their judgment to determine which sample size to use based on the initial scoping of the examination and subsequent findings on site.

Sample Selection from Automated Download or Loan Trial
Once the number of loans to be sampled is determined, examiners should select loans from the financial institution’s automated download of the loan portfolio or a loan trial, as opposed to making a general request for loans and allowing bank management to select the loans for review. Examiners should first determine if an automated download is available. Procedures for selecting loan samples from an automated download are explained in the next section. If an automated download is not available, the sample should be selected through the financial institution’s loan trial. The use of random selection methods (whether from an electronic or a hard copy list) should increase substantially the objectivity of the examination, as compared to those based on judgmental sampling. This is because the use of random selection methods removes the potential for bias in results associated with the loan selection process.

NOTE: There may be some difficulties with manipulating the electronic files or loan trial because of the need to understand the file structure and/or the codes used by the bank. Examiners should also request information about the loan codes from financial institution management.

Sample Selection from Automated Download
The following provides guidance for selecting a stratified random sample of loans for CRA review when the financial institution’s loans are provided in an electronic format. The different types of loans being sampled at a financial institution constitute the strata. A separate random sample will be selected from each stratum (loan type). Because the loans are in an electronic file, this is a fairly straightforward process: the loans can be electronically arranged and sorted in specified ways for sampling purposes.

Step 1. Once an electronic file of the financial institution’s loans is obtained, and the coding structure is known, the process of selecting a sample is relatively easy. The loans are grouped into the various loan universes that will be sampled (e.g., home purchase loans, small business loans). Each loan universe could be a separate electronic file or a subfile of the main file. Within each loan universe, a random sample of loans will be selected.

NOTE: There should be sufficient information in the file to identify the different loan types, though an examiner may need assistance from bank management to interpret the codes.

Step 2. For each universe, place the loans in random order. The random ordering is achieved by assigning a random number between zero and one (i.e., a decimal number) to each loan in the file, and then sorting the loans in ascending order by the random number. Excel software contains a random number generation tool that examiners should use to randomly select loans for review during an examination. This "random number generation" tool can be accessed by following these steps:

• Select the following from the Excel Menu:
• Tools
• Add-Ins
• Analysis Tool Pak (check box and click "OK")
• Tools (again)
• Data Analysis
• Random Number Generation (highlight and click "OK")
• Respond to the items on the Random Number Generation screen as follows:
• Number of Variables (Leave blank)
• Number of Random Numbers (Leave blank)
• Distribution (Select "Uniform" from list)
• Parameters (Leave default set at 0 and 1)
• Random Seed (Leave blank)
• Output Options (Click "Output Range")
– (Click the box for "Output Range")
– (Select the range (output location) for the random numbers by highlighting the column on the spreadsheet where the random numbers should be placed. Use the "Shift" key and the down arrow to highlight the column.)
– (Click box at end of selected range or press enter)
– (Click "OK")
• The random numbers are automatically assigned and placed in the designated statistical column. Sort the loans in ascending order by the random number as follows:
• Click a cell in the column you would like to sort by
• Click "Sort Ascending"

Step 3. Once the loans for a given type are placed in random order, determine the number of loans to select for review. The sample needed for the examination is simply taken from the top of the list. If an "out-of-scope" loan is identified in the sample, the examiner selects the next loan from the list to replace it. From within each loan type, print out all of the loans that will be reviewed. This information should be forwarded to bank management so that the loan documentation files will be ready at the commencement of the examination.

NOTE: An "out-of-scope" loan would be any loan that is not in the target universe. For instance, a loan that was originated prior to the last examination date, a business loan that is greater than $1,000,000.

Step 4. If an examiner decides that additional loans for a given stratum (type) are needed based on the results of the initial sample of loans, additional loans should be selected. As with replacements for "out-of-scope" loans, the examiner would take the additional sample of loans from the list, picking up where he or she left off when selecting the initial sample.

Sample Selection from a Loan Trial
For the case of sampling from a loan trial, the selection of a simple random sample from each stratum (type) would be rather difficult to do. Instead, another type of statistical sample, referred to as a systematic sample, should be selected from each stratum. As is true for a simple random sample, each loan in a given stratum will have the same chance of being selected for review. The basic idea of systematic sampling is straightforward:

• Select every kth loan (for example, every fifth loan) after selecting the initial loan at random from among the first "k" loans (for example, a random selection from among the first five loans).

The logistics of preparing a "universe" of loans from the loan trial for sampling, however, can be somewhat problematic, as will subsequently be discussed.

The different types of loans being sampled at a bank constitute strata. A separate systematic sample will be selected from each stratum (loan type). There may be a separate loan trial (or group of two or more trials) for each stratum. Alternatively, the different types of loans may be mixed together on a single loan trial. These two possible situations are addressed separately as Case 1 and Case 2, as follows:

Case 1: The bank provides separate loan trials for each of the major types of loans being sampled.

Assume there is only one loan trial for each type of loan. If there are two or more trials for a type, the lists can just be merged to form one list.

Step 1. Review the loan trial and cross out any loans that can be identified as being "out-of-scope" for the review (e.g., the date of the loan is not within the time period specified for review).

Step 2. Once the "out-of-scope" loans have been crossed off, number the remaining loans consecutively from 1 to N, where N is the total number of "in-scope" loans on the list.

NOTE: Some of the loans in the remaining list may still be "out-of-scope," but cannot be identified prior to the review process.

Step 3. Determine a sampling (or skip) interval "k" by dividing N by the target sample size n, and rounding the result off to the nearest integer. For example, if there were N=123 loans on the trial for a given loan type, and the examiner decides to select n=10 of them for review, the selection interval "k" would be 12 (i.e., 123/10, rounded to the nearest integer).

NOTE: To compensate for "out-of-scope" loans, it is at this point that the examiner may wish to "oversample." This procedure is explained in Step 5.

Step 4. Identify the "random start" (initial selection) for the systematic selection, which is a randomly selected loan from among the first "k" loans listed in the trial. To do this, refer to the list of random numbers provided. Take the first random number available from this list (for example, the first one that has not yet been used). This will be a decimal number between 0 and 1. Multiply the random number by the selection interval "k" and round the result up to the next integer. This integer will identify the "random start." Suppose that for the example introduced above with k=12, the next available random number from your list is 0.34309. The product of 12 and 0.34309 is 4.11708. Therefore, the random start (first selection) would be loan number 5 (since you always round up). Once you have the random start, the other selections are identified by repeatedly adding the skip interval "k" to the previous selection number. For example, in the case discussed above with a random start of 5 and a selection interval of k=12, the other selections would be loans numbered 17, 29, 41, 53, 65, 77, 89, 101, and 113.

Step 5. The systematic selection process should continue until the end of the list is reached, even if this adds one or two selections to the target sample size (this could happen because of the rounding of the skip interval "k" to an integer). If any of the loans selected are identified during the review process as "out-of- scope," it should be dropped from the sample without being replaced. For example, do not replace an "out-of-scope" loan with the next one on the list. The deletion from the sample of "out-of-scope" loans may reduce the sample size below the target. If such a reduction is minimal, and if the examiner feels that the remaining sample is adequate, nothing more needs to be done. However, if the reduction in the sample size is of concern, there are two methods that can be used to compensate for "out-of-scope" loans.

• Method 1. The preferred method is to "oversample" to allow for anticipated deletions. For example, if the examiner expects, based on previous experience, that 10% of the loans in the loan trial are actually "out-of-scope," the sample can be increased by 10% to account for this. In the example discussed above with a target sample size of 10, the examiner would select a systematic sample of 11 to compensate for an anticipated "out-of-scope" rate of 10%. This would dictate a selection interval "k" of 11 rather than 12. If all 11 loans turn out to be "in-scope," they should all be retained for the sample.
• Method 2. Select a supplemental sample after a review of the initial sample. In this case, the size of the supplemental sample would be determined to provide the correct number of additional sample loans. The selection procedures used for the supplemental loan sample would be the same as those used for the initial sample, after removing the initial selections. For example, if in the case discussed above for selecting ten loans, suppose that three of them turn out to be "out-of- scope," leaving a deficit of three. A supplemental sample of three or four loans could then be selected. It would be wise to select four, since the initial sample suggests that the "out-of-scope" rate is 30%. To select four additional loans, the remaining loans (i.e., 123-10) would be renumbered from 1 to 113. The new selection interval "k" would be 28 (i.e., 113/4, rounded). To identify the random start for the supplemental sample, use the next random number from the list of numbers provided at the end of this section. Multiply this random number by 28, and round the product up to the next integer to identify the first selection.

Case 2: The bank provides only one loan trial, and all loan types are mixed throughout the list.

• This case is more complicated and more prone to errors than Case 1, even though the basic idea is the same. The first step is identical to that for Case 1— Review the loan trial and cross out those that are known to be "out-ofscope."
• Next, go through the list and classify each loan by type. This might best be done using different colored highlighters to identify the loans by the different types. Then, the loans of a given type (same color) are numbered consecutively from 1 to N, and selection from these would be carried out the same way as it was in Case 1 (Steps 3–5), including any possible "oversampling" or sample supplementation.

Information to be Gathered for Each Loan Record

• Once the loans for each sample have been identified, record relevant loan information into a spreadsheet. Data for each loan should include, at a minimum:
  • Institution’s internal loan ID number;
  • Loan type;
  • Loan dollar amount;
  • Location – In cases where the census tract of the loan is not readily available, examiners are expected to geocode the loans (refer to "Geocoding Loan Locations" below);
  • For the home related and consumer loans sampled, the borrower income that was used to approve the loan; and
  • For the small business and small farm loans sampled, the business’s or farm’s revenue.
• When data is missing, attempt to obtain this information through discussions with institution personnel. Obtaining information through these discussions can significantly reduce the number of records in the sample with "missing data" and thereby increase the validity of each sample.

Geocoding Loan Locations
If the institution has not already geocoded each loan by determining the Metropolitan Statistical Area (MSA) (if applicable), state, county, and census tract, the examiners will need to determine this for the loans in the sample. MSA /Census tract information is available through the Internet.

Calculating Proportion Estimates

• Calculate the following proportion estimates as itemized in the examination procedures:
  • Percentage of the number of loans (by product type) inside and outside the assessment area(s); and
  • Percentage of the dollar amount of loans (by product type) inside and outside the assessment area(s).
• In accordance with the CRA examination procedures, examiners should tabulate the following statistics based on
  only those loan records from the sample that are within the assessment area(s) for each product category:
  • Number and percentage of loan originations (by product category, if applicable) in low-, moderate-, middle-, and upper-income geographies;
  • Dollar amount and percentage of loan originations (by product category, if applicable) in low-, moderate-, middle-, and upper-income geographies;
  • Number and percentage of loan originations (by product category, if applicable) to low-, moderate-, middle-, and upper-income borrowers;
  • Dollar amount and percentage of loan originations (by product category, if applicable) to low-, moderate-, middle-, and upper-income borrowers;
  • Number and percentage of loan originations to small businesses/farms of different sizes (by revenue); and
  • Dollar amount and percentage of loan originations to small businesses/farms of different sizes (by revenue).

Examiners should follow the guidelines in the CRA examination procedures for analyzing the results from sampling and, ultimately, assign a rating to the institution’s lending performance.

Sampling Guidlelines for Compliance
Sample Size Table
90% Confidence Interval
Number of Originations of Purchases	Sample Size
	10% Precision	15% Precision
10	9	8
50	34	24
100	50	31
200	67	37
300	76	39
400	81	40
500	84	41
600	86	42
700	88	42
800	89	42
900	91	43
1,000	92	43
1,250	93	43
1,500	94	43
1,750	95	44
2,000	96	44
2,250	96	44
2,500	97	44
2,750	97	44
3,000	97	44
3,500	98	44
4,000	98	44
4,500	98	44
5,000	99	44

Random Numbers

0.38200 0.11692 0.54509 0.93725 0.10068 0.76571 0.03854 0.57637 0.59648 0.80123 0.99829 0.71999 0.89911 0.75829 0.05795 0.95322 0.88461 0.16840 0.78448 0.21992 0.95846 0.17753 0.22163 0.14505 0.01450 0.68123 0.55965 0.82025 0.40742 0.32841 0.59865 0.06351 0.86325 0.15769 0.81817 0.16541 0.13858 0.12033 0.16309 0.95004 0.24503 0.09137 0.57833 0.06900 0.04547 0.47011 0.10123 0.56258 0.03238 0.35252 0.37065 0.22309 0.16413 0.46727 0.11570 0.23917 0.21961 0.88348 0.51720 0.43397 0.01709 0.71441 0.01358 0.91305 0.28504 0.40043 0.08927 0.40794 0.34309 0.05341 0.66530 0.25922 0.55364 0.71868 0.53526 0.80044 0.35737 0.07834 0.60927 0.08249 0.37184 0.74892 0.40172 0.44646 0.35560 0.54076 0.28321 0.44240 0.91031 0.09787 0.45540 0.53639 0.46602 0.09870 0.20899 0.47337 0.42616 0.16886 0.47710 0.11240 0.30390 0.97241 0.56795 0.02460 0.97571 0.32383 0.66408 0.76263 0.80667 0.07096 0.60707 0.73745 0.99124 0.66311 0.57186 0.90796 0.25626 0.17273 0.33290 0.62673 0.95169 0.92596 0.47371 0.73421 0.05344 0.89953 0.10895 0.25645 0.70504 0.54039 0.54143 0.74697 0.81652 0.64925 0.19565 0.82986 0.97250 0.57942 0.97919 0.23957 0.46632 0.46541 0.08670 0.56990 0.30021 0.93738 0.79952 0.79647 0.75021 0.15278 0.82580 0.27607 0.35148 0.04978 0.93988 0.42332 0.77566 0.91806 0.45799 0.53157 0.07434 0.56850 0.50566 0.13248 0.19843 0.55220 0.50697 0.32572 0.06406 0.19382 0.71819 0.93927

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Footnote:

¹ This section fully incorporates the examination procedures issued under DSC RD Memo 05-032: Interagency Community Reinvestment Act Examination Procedures for Intermediate Small Institutions and DSC RD Memo 06-009: Revised Interagency Community Reinvestment Act Examination Procedures.

² The Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, and The Office of the Comptroller of the Currency

³ A list of distressed or underserved nonmetropolitan middle-income geographies is available on the FFIEC web site at www.ffiec.gov.

⁴ The reference to MSA may also reference MD.

⁵ "Evidence of discriminatory or other illegal credit practices" includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) Violations of the Truth in Lending Act regarding a consumer’s right of rescission.

⁶ The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

⁷ A list of distressed or undeserved non-metropolitan middle-income geographies will be made available on the FFIEC web site at www.ffiec.gov.

⁸ The reference to MSA may also reference MD.

⁹ The Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, and The Office of the Comptroller of the Currency

¹⁰ A list of distressed or underserved nonmetropolitan middle-income geographies is available on the FFIEC web site at www.ffiec.gov.

¹¹ The reference to MSA may also reference MD.

¹² "Evidence of discriminatory or other illegal credit practices" includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) Violations of the Truth in Lending Act regarding a consumer’s right of rescission.

¹³ The reference to MSA may also reference MD.

¹⁴ "Evidence of discriminatory or other illegal credit practices" includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) Violations of the Truth in Lending Act regarding a consumer’s right of rescission.

¹⁵The Board of Governors of the Federal Reserve System, The Federal Deposit Insurance Corporation, and The Office of the Comptroller of the Currency

¹⁶ A list of distressed or underserved nonmetropolitan middle-income geographies is available on the FFIEC web site at www.ffiec.gov.

¹⁷ The reference to MSA may also reference metropolitan division (MD).

¹⁸ "Evidence of discriminatory or other illegal credit practices" includes, but is not limited to: (a) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act or the Fair Housing Act; (b) Violations of the Home Ownership and Equity Protection Act; (c) Violations of section 5 of the Federal Trade Commission Act; (d) Violations of section 8 of the Real Estate Settlement Procedures Act; and (e) Violations of the Truth in Lending Act regarding a consumer’s right of rescission.

¹⁹ This section fully incorporates the examination procedures issued under DCA RD Memo 02-002: Interagency Examination Procedures for Disclosure and Reporting of Community Reinvestment Act Related Agreements.