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12 C.F.R. §§ 345.22–345.26

5 sections in range

§345.22. Retail lending test.

12 C.F.R. § 345.22

(a)
Retail Lending Test—
(1)
In general. Pursuant to § 345.21, the Retail Lending Test evaluates a bank's record of helping to meet the credit needs of its entire community through the bank's origination and purchase of home mortgage loans, multifamily loans, small business loans, and small farm loans.
(2)
Automobile loans. The Retail Lending Test evaluates a bank's record of helping to meet the credit needs of its entire community through the bank's origination and purchase of automobile loans if the bank is a majority automobile lender. A bank that is not a majority automobile lender may opt to have automobile loans evaluated under this section.
(b)
Methodology overview—
(1)
Retail Lending Volume Screen. The FDIC evaluates whether a bank meets or surpasses the Retail Lending Volume Threshold in each facility-based assessment area pursuant to the Retail Lending Volume Screen as provided in paragraph (c) of this section.
(2)
Retail lending distribution analysis. Except as provided in paragraph (b)(5) of this section, the FDIC evaluates the geographic and borrower distributions of each of a bank's major product lines in each Retail Lending Test Area, as provided in paragraphs (d) and (e) of this section.
(3)
Retail Lending Test recommended conclusions. Except as provided in paragraph (b)(5) of this section, the FDIC develops a Retail Lending Test recommended conclusion pursuant to paragraph (f) of this section for each Retail Lending Test Area.
(4)
Retail Lending Test conclusions. Except as provided in paragraph (b)(5) of this section, the FDIC's determination of a bank's Retail Lending Test conclusion for a Retail Lending Test Area is informed by the bank's Retail Lending Test recommended conclusion for the Retail Lending Test Area, performance context factors provided in § 345.21(d), and the additional factors provided in paragraph (g) of this section.
(5)
Exceptions—
(i)
No major product line. If a bank has no major product line in a facility-based assessment area, the FDIC assigns the bank a Retail Lending Test conclusion for that facility-based assessment area based upon its performance on the Retail Lending Volume Screen pursuant to paragraph (c) of this section, performance context factors provided in § 345.21(d), and the additional factors provided in paragraph (g) of this section.
(ii)
Banks that lack an acceptable basis for not meeting the Retail Lending Volume Threshold. The FDIC assigns a Retail Lending Test conclusion for a facility-based assessment area in which a bank lacks an acceptable basis for not meeting the Retail Lending Volume Threshold as provided in paragraph (c)(3)(iii) of this section.
(c)
Retail Lending Volume Screen—
(1)
Retail Lending Volume Threshold. A bank meets or surpasses the Retail Lending Volume Threshold in a facility-based assessment area if the bank has a Bank Volume Metric of 30 percent or greater of the Market Volume Benchmark for that facility-based assessment area. The FDIC calculates the Bank Volume Metric and the Market Volume Benchmark pursuant to section I of appendix A to this part.
(2)
Banks that meet or surpass the Retail Lending Volume Threshold in a facility-based assessment area. If a bank meets or surpasses the Retail Lending Volume Threshold in a facility-based assessment area pursuant to paragraph (c)(1) of this section, the FDIC develops a Retail Lending Test recommended conclusion for the facility-based assessment area pursuant to paragraphs (d) through (f) of this section.
(3)
Banks that do not meet the Retail Lending Volume Threshold in a facility-based assessment area—
(i)
Acceptable basis factors. If a bank does not meet the Retail Lending Volume Threshold in a facility-based assessment area pursuant to paragraph (c)(1) of this section, the FDIC determines whether the bank has an acceptable basis for not meeting the Retail Lending Volume Threshold in the facility-based assessment area by considering:
(A)
The bank's dollar volume of non-automobile consumer loans;
(B)
The bank's institutional capacity and constraints, including the financial condition of the bank;
(C)
The presence or lack of other lenders in the facility-based assessment area;
(D)
Safety and soundness limitations;
(E)
The bank's business strategy; and
(F)
Any other factors that limit the bank's ability to lend in the facility-based assessment area.
(ii)
Banks that have an acceptable basis for not meeting the Retail Lending Volume Threshold in a facility-based assessment area. If, after reviewing the factors described in paragraph (c)(3)(i) of this section, the FDIC determines that a bank has an acceptable basis for not meeting the Retail Lending Volume Threshold in a facility-based assessment area, the FDIC develops a Retail Lending Test recommended conclusion for the facility-based assessment area in the same manner as for a bank that meets or surpasses the Retail Lending Volume Threshold under paragraph (c)(2) of this section.
(iii)
Banks that lack an acceptable basi— s for not meeting the Retail Lending Volume Threshold in a facility-based assessment area—(A) Large banks. If, after reviewing the factors in paragraph (c)(3)(i) of this section, the FDIC determines that a large bank lacks an acceptable basis for not meeting the Retail Lending Volume Threshold in a facility-based assessment area, the FDIC assigns the bank a Retail Lending Test conclusion of “Needs to Improve” or “Substantial Noncompliance” for that facility-based assessment area. In determining whether “Needs to Improve” or “Substantial Noncompliance” is the appropriate conclusion, the FDIC considers:

(1) The bank's retail lending volume and the extent by which it did not meet the Retail Lending Volume Threshold;

(2) The bank's distribution analysis pursuant to paragraphs (d) through (f) of this section;

(3) Performance context factors provided in § 345.21(d); and

(4) Additional factors provided in paragraph (g) of this section.

(B)
Intermediate or small banks. If, after reviewing the factors in paragraph (c)(3)(i) of this section, the FDIC determines that an intermediate bank, or a small bank that opts to be evaluated under the Retail Lending Test, lacks an acceptable basis for not meeting the Retail Lending Volume Threshold in a facility-based assessment area, the FDIC develops a Retail Lending Test recommended conclusion for the facility-based assessment area pursuant to paragraphs (d) through (f) of this section. The FDIC's determination of a bank's Retail Lending Test conclusion for the facility-based assessment area is informed by:

(1) The bank's Retail Lending Test recommended conclusion for the facility-based assessment area;

(2) The bank's retail lending volume and the extent by which it did not meet the Retail Lending Volume Threshold;

(3) Performance context factors provided in § 345.21(d); and

(4) Additional factors provided in paragraph (g) of this section.

(d)
Scope of Retail Lending Test distribution analysis—
(1)
Product lines evaluated in a Retail Lending Test Area. In each applicable Retail Lending Test Area, the FDIC evaluates originated and purchased loans in each of the following product lines that is a major product line, as described in paragraph (d)(2) of this section:
(i)
Closed-end home mortgage loans in a bank's facility-based assessment areas and, as applicable, retail lending assessment areas and outside retail lending area;
(ii)
Small business loans in a bank's facility-based assessment areas and, as applicable, retail lending assessment areas and outside retail lending area;
(iii)
Small farm loans in a bank's facility-based assessment areas and, as applicable, outside retail lending area; and
(iv)
Automobile loans in a bank's facility-based assessment areas and, as applicable, outside retail lending area.
(2)
Major product line standards—
(i)
Major product line standard for facility-based assessment areas and outside retail lending areas. In a facility-based assessment area or outside retail lending area, a product line is a major product line if the bank's loans in that product line comprise 15 percent or more of the bank's loans across all of the bank's product lines in the facility-based assessment area or outside retail lending area, as determined pursuant to paragraph II.b.1 of appendix A to this part.
(ii)
Major product line standards for retail lending assessment areas. In a retail lending assessment area:
(A)
Closed-end home mortgage loans are a major product line in any calendar year in the evaluation period in which the bank delineates a retail lending assessment area based on its closed-end home mortgage loans as determined by the standard in § 345.17(c)(1); and
(B)
Small business loans are a major product line in any calendar year in the evaluation period in which the bank delineates a retail lending assessment area based on its small business loans as determined by the standard in § 345.17(c)(2).
(e)
Retail Lending Test distribution analysis. The FDIC evaluates a bank's Retail Lending Test performance in each of its Retail Lending Test Areas by considering the geographic and borrower distributions of a bank's loans in its major product lines.
(1)
Distribution analysis in general—
(i)
Distribution analysis for closed-end home mortgage loans, small business loans, and small farm loans. For closed-end home mortgage loans, small business loans, and small farm loans, respectively, the FDIC compares a bank's geographic and borrower distributions to performance ranges based on the applicable market and community benchmarks, as provided in paragraph (f) of this section and section V of appendix A to this part.
(ii)
Distribution analysis for automobile loans. For automobile loans, the FDIC compares a bank's geographic and borrower distributions to the applicable community benchmarks, as provided in paragraph (f) of this section and section VI of appendix A to this part.
(2)
Categories of lending evaluated—
(i)
Geographic distributions. For each major product line in each Retail Lending Test Area, the FDIC evaluates the geographic distributions separately for the following categories of census tracts:
(A)
Low-income census tracts; and
(B)
Moderate-income census tracts.
(ii)
Borrower distributions. For each major product line in each Retail Lending Test Area, the FDIC evaluates the borrower distributions separately for, as applicable, the following categories of borrowers:
(A)
Low-income borrowers;
(B)
Moderate-income borrowers;
(C)
Businesses with gross annual revenues of $250,000 or less;
(D)
Businesses with gross annual revenues greater than $250,000 but less than or equal to $1 million;
(E)
Farms with gross annual revenues of $250,000 or less; and
(F)
Farms with gross annual revenues greater than $250,000 but less than or equal to $1 million.
(3)
Geographic distribution measures. To evaluate the geographic distributions in a Retail Lending Test Area, the FDIC considers the following measures:
(i)
Geographic Bank Metric. For each major product line, a Geographic Bank Metric, calculated pursuant to paragraph III.a of appendix A to this part;
(ii)
Geographic Market Benchmark. For each major product line except automobile loans, a Geographic Market Benchmark, calculated pursuant to paragraph III.b of appendix A to this part for facility-based assessment areas and retail lending assessment areas, and paragraph III.d of appendix A to this part for outside retail lending areas; and
(iii)
Geographic Community Benchmark. For each major product line, a Geographic Community Benchmark, calculated pursuant to paragraph III.c of appendix A to this part for facility-based assessment areas and retail lending assessment areas, and paragraph III.e of appendix A to this part for outside retail lending areas.
(4)
Borrower distribution measures. To evaluate the borrower distributions in a Retail Lending Test Area, the FDIC considers the following measures:
(i)
Borrower Bank Metric. For each major product line, a Borrower Bank Metric, calculated pursuant to paragraph IV.a of appendix A to this part;
(ii)
Borrower Market Benchmark. For each major product line except automobile loans, a Borrower Market Benchmark, calculated pursuant to paragraph IV.b of appendix A to this part for facility-based assessment areas and retail lending assessment areas, and paragraph IV.d of appendix A to this part for outside retail lending areas; and
(iii)
Borrower Community Benchmark. For each major product line, a Borrower Community Benchmark, calculated pursuant to paragraph IV.c of appendix A to this part for facility-based assessment areas and retail lending assessment areas, and paragraph IV.e of appendix A to this part for outside retail lending areas.
(f)
Retail Lending Test recommended conclusions—
(1)
In general. Except as described in paragraphs (b)(5)(i) and (c)(3)(iii)(A) of this section, the FDIC develops a Retail Lending Test recommended conclusion for each of a bank's Retail Lending Test Areas based on the distribution analysis described in paragraph (e) of this section and using performance ranges, supporting conclusions, and product line scores as provided in sections V through VII of appendix A to this part. For each major product line, the FDIC develops a separate supporting conclusion for each category of census tracts and each category of borrowers described in paragraphs V.a and VI.a of appendix A to this part.
(2)
Geographic distribution supporting conclusions—
(i)
Geographic distribution supporting conclusions for closed-end home mortgage loans, small business loans, and small farm loans. To develop supporting conclusions for geographic distributions of closed-end home mortgage loans, small business loans, and small farm loans, the FDIC evaluates the bank's performance by comparing the Geographic Bank Metric to performance ranges, based on the Geographic Market Benchmark, the Geographic Community Benchmark, and multipliers, as described in paragraphs V.b and V.c of appendix A to this part.
(ii)
Geographic distribution supporting conclusions for automobile loans. To develop supporting conclusions for geographic distributions for automobile loans, the FDIC evaluates the bank's performance by comparing the Geographic Bank Metric to the Geographic Community Benchmark, as described in paragraph VI.b of appendix A to this part.
(3)
Borrower distribution supporting conclusions—
(i)
Borrower distribution supporting conclusions for closed-end home mortgage loans, small business loans, and small farm loans. To develop supporting conclusions for borrower distributions of closed-end home mortgage loans, small business loans, and small farm loans, the FDIC evaluates the bank's performance by comparing the Borrower Bank Metric to performance ranges, based on the Borrower Market Benchmark, Borrower Community Benchmark, and multipliers, as described in paragraphs V.d and V.e of appendix A to this part.
(ii)
Borrower distribution supporting conclusions for automobile loans. To develop supporting conclusions for borrower distributions for automobile loans, the FDIC evaluates the bank's performance by comparing the Borrower Bank Metric to the Borrower Community Benchmark, as described in paragraph VI.c of appendix A to this part.
(4)
Development of Retail Lending Test recommended conclusions—
(i)
Assignment of performance scores. For each supporting conclusion developed pursuant to paragraphs (f)(2) and (3) of this section, the FDIC assigns a corresponding performance score as described in sections V and VI of appendix A to this part.
(ii)
Combination of performance scores. As described in section VII of appendix A to this part, for each Retail Lending Test Area, the FDIC:
(A)
Combines the performance scores for each supporting conclusion for each major product line into a product line score; and
(B)
Calculates a weighted average of product line scores across all major product lines.
(iii)
Retail Lending Test recommended conclusions. For each Retail Lending Test Area, the FDIC develops the Retail Lending Test recommended conclusion that corresponds to the weighted average of product line scores developed pursuant to paragraph (f)(4)(ii)(B) of this section, as described in section VII of appendix A to this part.
(g)
Additional factors considered when evaluating retail lending performance. The factors in paragraphs (g)(1) through (7) of this section, as appropriate, inform the FDIC's determination of a bank's Retail Lending Test conclusion for a Retail Lending Test Area:
(1)
Information indicating that a bank purchased closed-end home mortgage loans, small business loans, small farm loans, or automobile loans for the sole or primary purpose of inappropriately enhancing its retail lending performance, including, but not limited to, information indicating subsequent resale of such loans or any indication that such loans have been considered in multiple depository institutions' CRA evaluations, in which case the FDIC does not consider such loans in the bank's performance evaluation;
(2)
The dispersion of a bank's closed-end home mortgage lending, small business lending, small farm lending, or automobile lending within a facility-based assessment area to determine whether there are gaps in lending that are not explained by performance context;
(3)
The number of lenders whose home mortgage loans, multifamily loans, small business loans, and small farm loans and deposits data are used to establish the applicable Retail Lending Volume Threshold, geographic distribution market benchmarks, and borrower distribution market benchmarks;
(4)
Missing or faulty data that would be necessary to calculate the relevant metrics and benchmarks or any other factors that prevent the FDIC from calculating a Retail Lending Test recommended conclusion. If unable to calculate a Retail Lending Test recommended conclusion, the FDIC assigns a Retail Lending Test conclusion based on consideration of the relevant available data;
(5)
Whether the Retail Lending Test recommended conclusion does not accurately reflect the bank's performance in a Retail Lending Test Area in which one or more of the bank's major product lines consists of fewer than 30 loans;
(6)
A bank's closed-end home mortgage lending, small business lending, small farm lending, or automobile lending in distressed or underserved nonmetropolitan middle-income census tracts where a bank's nonmetropolitan facility-based assessment area or nonmetropolitan retail lending assessment area includes very few or no low- and moderate-income census tracts; and
(7)
Information indicating that the credit needs of the facility-based assessment area or retail lending assessment area are not being met by lenders in the aggregate, such that the relevant benchmarks do not adequately reflect community credit needs.
(h)
Retail Lending Test performance conclusions and ratings—
(1)
Conclusions—
(i)
In general. Pursuant to § 345.28, section VIII of appendix A to this part, and appendix C to this part, the FDIC assigns conclusions for a bank's Retail Lending Test performance in each Retail Lending Test Area, State, and multistate MSA, as applicable, and for the institution.
(ii)
Retail Lending Test Area conclusions. The FDIC assigns a Retail Lending Test conclusion for each Retail Lending Test Area based on the Retail Lending Test recommended conclusion, performance context factors provided in § 345.21(d), and the additional factors provided in paragraph (g) of this section, except as provided in paragraphs (h)(1)(ii)(A) and (B) of this section:
(A)
Facility-based assessment areas with no major product line. The FDIC assigns a Retail Lending Test conclusion for a facility-based assessment area in which a bank has no major product line based on the bank's performance on the Retail Lending Volume Screen pursuant to paragraph (c) of this section, performance context information provided in § 345.21(d), and the additional factors provided in paragraph (g) of this section.
(B)
Facility-based assessment areas in which a bank lacks an acceptable basis for not meeting the Retail Lending Volume Threshold. The FDIC assigns a Retail Lending Test conclusion for a facility-based assessment area in which a bank lacks an acceptable basis for not meeting the Retail Lending Volume Threshold as provided in paragraph (c)(3)(iii) of this section.
(2)
Ratings. Pursuant to § 345.28 and appendix D to this part, the FDIC incorporates a bank's Retail Lending Test conclusions into its State or multistate MSA ratings, as applicable, and its institution rating.
Notes, amendments, and revision history

Authority

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u, 2901-2908, 3103-3104, and 3108(a).

Source

Source: 89 FR 7205, Feb. 1, 2024, unless otherwise noted.

§345.23. Retail services and products test.

12 C.F.R. § 345.23

(a)
Retail Services and Products Test—
(1)
In general. Pursuant to § 345.21, the Retail Services and Products Test evaluates the availability of a bank's retail banking services and retail banking products and the responsiveness of those services and products to the credit needs of the bank's entire community, including low- and moderate-income individuals, families, or households, low- and moderate-income census tracts, small businesses, and small farms. The FDIC evaluates the bank's retail banking services, as described in paragraph (b) of this section, and the bank's retail banking products, as described in paragraph (c) of this section.
(2)
Main offices. For purposes of this section, references to a branch also include a main office that is open to, and accepts deposits from, the general public.
(3)
Exclusion. If the FDIC considers services under the Community Development Services Test in § 345.25, the FDIC does not consider those services under the Retail Services and Products Test.
(b)
Retail banking services—
(1)
Scope of evaluation. To evaluate a bank's retail banking services, the FDIC considers a bank's branch availability and services provided at branches, remote service facility availability, and digital delivery systems and other delivery systems, as follows:
(i)
Branch availability and services. The FDIC considers the branch availability and services provided at branches of banks that operate one or more branches pursuant to paragraph (b)(2) of this section.
(ii)
Remote service facility availability. The FDIC considers the remote service facility availability of banks that operate one or more remote service facilities pursuant to paragraph (b)(3) of this section.
(iii)
Digital delivery systems and other delivery systems. The FDIC considers the digital delivery systems and other delivery systems of banks pursuant to paragraph (b)(4) of this section, as follows:
(A)
The FDIC considers the digital delivery systems and other delivery systems of the following banks— (1) Large banks that had assets greater than $10 billion as of December 31 in both of the prior two calendar years; and

(2) Large banks that had assets less than or equal to $10 billion as of December 31 in either of the prior two calendar years and that do not operate branches.

(B)
For a large bank that had assets less than or equal $10 billion as of December 31 in either of the prior two calendar years and that operates at least one branch, the FDIC considers the bank's digital delivery systems and other delivery systems at the bank's option.
(2)
Branch availability and services. The FDIC evaluates a bank's branch availability and services in a facility-based assessment area based on the following:
(i)
Branch distribution. The FDIC considers a bank's branch distribution using the following:
(A)
Branch distribution metrics. The FDIC considers the number and percentage of the bank's branches within low-, moderate-, middle-, and upper-income census tracts.
(B)
Benchmarks. The FDIC's consideration of the branch distribution metrics is informed by the following benchmarks:

(1) Percentage of census tracts in the facility-based assessment area that are low-, moderate-, middle-, and upper-income census tracts;

(2) Percentage of households in the facility-based assessment area that are in low-, moderate-, middle-, and upper-income census tracts;

(3) Percentage of total businesses in the facility-based assessment area that are in low-, moderate-, middle-, and upper-income census tracts; and

(4) Percentage of all full-service depository institution branches in the facility-based assessment area that are in low-, moderate-, middle-, and upper-income census tracts.

(C)
Additional geographic considerations. The FDIC considers the availability of branches in the following geographic areas:

(1) Middle- and upper-income census tracts in which a branch delivers services to low- and moderate-income individuals, families, or households to the extent that these individuals, families, or households use the services offered;

(2) Distressed or underserved nonmetropolitan middle-income census tracts; and

(3) Native Land Areas.

(ii)
Branch openings and closings. The FDIC considers a bank's record of opening and closing branches since the previous CRA examination to inform the degree of accessibility of services to low- and moderate-income individuals, families, or households, small businesses, and small farms, and low- and moderate-income census tracts.
(iii)
Branch hours of operation and services. The FDIC considers the following:
(A)
The reasonableness of branch hours in low- and moderate-income census tracts compared to middle- and upper-income census tracts, including, but not limited to, whether branches offer extended and weekend hours.
(B)
The range of services provided at branches in low-, moderate-, middle-, and upper-income census tracts, respectively, including, but not limited to:

(1) Bilingual and translation services;

(2) Free or low-cost check cashing services, including, but not limited to, check cashing services for government-issued and payroll checks;

(3) Reasonably priced international remittance services; and

(4) Electronic benefit transfers.

(C)
The degree to which branch-provided retail banking services are responsive to the needs of low- and moderate-income individuals, families, or households in a bank's facility-based assessment areas.
(3)
Remote service facility availability. The FDIC evaluates a bank's remote service facility availability in a facility-based assessment area based on the following:
(i)
Remote service facility distribution. The FDIC considers a bank's remote service facility distribution using the following:
(A)
Remote service facility distribution metrics. The FDIC considers the number and percentage of the bank's remote service facilities within low-, moderate-, middle-, and upper-income census tracts.
(B)
Benchmarks. The FDIC's consideration of the remote service facility distribution metrics is informed by the following benchmarks:

(1) Percentage of census tracts in the facility-based assessment area that are low-, moderate-, middle-, and upper-income census tracts;

(2) Percentage of households in the facility-based assessment area that are in low-, moderate-, middle-, and upper-income census tracts; and

(3) Percentage of total businesses in the facility-based assessment area that are in low-, moderate-, middle-, and upper-income census tracts.

(C)
Additional geographic considerations. The FDIC considers the availability of remote service facilities in the following geographic areas:

(1) Middle- and upper-income census tracts in which a remote service facility delivers services to low- and moderate-income individuals, families, or households to the extent that these individuals, families, or households use the services offered;

(2) Distressed or underserved nonmetropolitan middle-income census tracts; and

(3) Native Land Areas.

(ii)
Access to out-of-network ATMs. The FDIC considers whether the bank offers customers fee-free access to out-of-network ATMs in low- and moderate-income census tracts.
(4)
Digital delivery systems and other delivery systems. The FDIC evaluates the availability and responsiveness of a bank's digital delivery systems and other delivery systems, including to low- and moderate-income individuals, families, or households at the institution level by considering:
(i)
The range of retail banking services and retail banking products offered through digital delivery systems and other delivery systems;
(ii)
The bank's strategy and initiatives to serve low- and moderate-income individuals, families, or households with digital delivery systems and other delivery systems as reflected by, for example, the costs, features, and marketing of the delivery systems; and
(iii)
Digital delivery systems and other delivery systems activity by individuals, families or households in low-, moderate-, middle-, and upper-income census tracts as evidenced by:
(A)
The number of checking and savings accounts opened each calendar year during the evaluation period digitally and through other delivery systems in low-, moderate-, middle-, and upper-income census tracts;
(B)
The number of checking and savings accounts opened digitally and through other delivery systems and that are active at the end of each calendar year during the evaluation period in low-, moderate-, middle-, and upper-income census tracts; and
(C)
Any other bank data that demonstrates digital delivery systems and other delivery systems are available to individuals and in census tracts of different income levels, including low- and moderate-income individuals, families, or households and low- and moderate-income census tracts.
(c)
Retail banking products evaluation—
(1)
Scope of evaluation. The FDIC evaluates a bank's retail banking products offered in the bank's facility-based assessment areas and nationwide, as applicable, at the institution level as follows:
(i)
Credit products and programs. The FDIC evaluates a bank's credit products and programs pursuant to paragraph (c)(2) of this section.
(ii)
Deposit products. The FDIC evaluates a bank's deposit products pursuant to paragraph (c)(3) of this section as follows:
(A)
For large banks that had assets greater than $10 billion as of December 31 in both of the prior two calendar years; and
(B)
For large banks that had assets less than or equal to $10 billion as of December 31 in either of the prior two calendar years, the FDIC considers a bank's deposit products only at the bank's option.
(2)
Credit products and programs. The FDIC evaluates whether a bank's credit products and programs are, consistent with safe and sound operations, responsive to the credit needs of the bank's entire community, including the needs of low- and moderate-income individuals, families, or households, residents of low- and moderate-income census tracts, small businesses, or small farms. Responsive credit products and programs may include, but are not limited to, credit products and programs that:
(i)
Facilitate home mortgage and consumer lending targeted to low- or moderate-income borrowers;
(ii)
Meet the needs of small businesses and small farms, including small businesses and small farms with gross annual revenues of $250,000 or less;
(iii)
Are conducted in cooperation with MDIs, WDIs, LICUs, or CDFIs;
(iv)
Are low-cost education loans; or
(v)
Are special purpose credit programs pursuant to 12 CFR 1002.8.
(3)
Deposit products. The FDIC evaluates the availability and usage of a bank's deposit products responsive to the needs of low- and moderate-income individuals, families, or households as follows:
(i)
Availability of deposit products responsive to the needs of low- and moderate-income individuals, families, or households. The FDIC considers the availability of deposit products responsive to the needs of low- and moderate-income individuals, families, or households based on the extent to which a bank offers deposit products that, consistent with safe and sound operations, have features and cost characteristics responsive to the needs of low- and moderate-income individuals, families, or households. Deposit products responsive to the needs of low- and moderate-income individuals, families, or households include but are not limited to, deposit products with the following types of features:
(A)
Low-cost features, including, but not limited to, deposit products with no overdraft or insufficient funds fees, no or low minimum opening balance, no or low monthly maintenance fees, or free or low-cost check-cashing and bill-pay services;
(B)
Features facilitating broad functionality and accessibility, including, but not limited to, deposit products with in-network ATM access, debit cards for point-of-sale and bill payments, and immediate access to funds for customers cashing government, payroll, or bank-issued checks; or
(C)
Features facilitating inclusivity of access by individuals without banking or credit histories or with adverse banking histories.
(ii)
Usage of deposit products responsive to the needs of low- and moderate-income individuals. The FDIC considers the usage of a bank's deposit products responsive to the needs of low- and moderate-income individuals, families, or households based on the following information:
(A)
The number of responsive deposit accounts opened and closed during each year of the evaluation period in low-, moderate-, middle-, and upper-income census tracts;
(B)
In connection with paragraph (c)(3)(ii)(A) of this section, the percentage of responsive deposit accounts compared to total deposit accounts for each year of the evaluation period;
(C)
Marketing, partnerships, and other activities that the bank has undertaken to promote awareness and use of responsive deposit accounts by low- and moderate-income individuals, families, or households; and
(D)
Optionally, any other information the bank provides that demonstrates usage of the bank's deposit products that have features and cost characteristics responsive to the needs of low- and moderate-income individuals, families, or households and low- and moderate-income census tracts.
(d)
Retail Services and Products Test performance conclusions and ratings—
(1)
Conclusions. Pursuant to § 345.28 and appendix C to this part, the FDIC assigns conclusions for a bank's Retail Services and Products Test performance in each facility-based assessment area, State and multistate MSA, as applicable, and for the institution. In assigning conclusions under this performance test, the FDIC may consider performance context information as provided in § 345.21(d). The evaluation of a bank's retail banking products under paragraph (c) of this section may only contribute positively to the bank's Retail Services and Products Test conclusion.
(2)
Ratings. Pursuant to § 345.28 and appendix D to this part, the FDIC incorporates a bank's Retail Services and Products Test conclusions into its State or multistate MSA ratings, as applicable, and its institution rating.
Notes, amendments, and revision history

Authority

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u, 2901-2908, 3103-3104, and 3108(a).

Source

Source: 89 FR 7205, Feb. 1, 2024, unless otherwise noted.

§345.24. Community development financing test.

12 C.F.R. § 345.24

(a)
Community Development Financing Test—
(1)
In general. Pursuant to § 345.21, the Community Development Financing Test evaluates the bank's record of helping to meet the credit needs of its entire community through community development loans and community development investments (i.e., the bank's community development financing performance).
(2)
Allocation. The FDIC considers community development loans and community development investments allocated pursuant to paragraph I.b of appendix B to this part.
(b)
Facility-based assessment area evaluation. The FDIC evaluates a bank's community development financing performance in a facility-based assessment area using the metric in paragraph (b)(1) of this section, benchmarks in paragraph (b)(2) of this section, and a review of the impact and responsiveness of the bank's community development loans and community development investments in paragraph (b)(3) of this section, and assigns a conclusion for a facility-based assessment area pursuant to paragraph d.1 of appendix C to this part.
(1)
Bank Assessment Area Community Development Financing Metric. The Bank Assessment Area Community Development Financing Metric measures the dollar volume of a bank's community development loans and community development investments that benefit or serve a facility-based assessment area compared to deposits in the bank that are located in the facility-based assessment area, calculated pursuant to paragraph II.a of appendix B to this part.
(2)
Benchmarks. The FDIC compares the Bank Assessment Area Community Development Financing Metric to the following benchmarks:
(i)
Assessment Area Community Development Financing Benchmark. For each of a bank's facility-based assessment areas, the Assessment Area Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve the facility-based assessment area for all large depository institutions compared to deposits located in the facility-based assessment area for all large depository institutions, calculated pursuant to paragraph II.b of appendix B to this part.
(ii)
MSA and Nonmetropolitan Nationwide Community Development Financing Benchmarks.
(A)
For each of a bank's facility-based assessment areas within an MSA, the MSA Nationwide Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve MSAs in the nationwide area for all large depository institutions compared to deposits located in the MSAs in the nationwide area for all large depository institutions.
(B)
For each of a bank's facility-based assessment areas within a nonmetropolitan area, the Nonmetropolitan Nationwide Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve nonmetropolitan areas in the nationwide area for all large depository institutions compared to deposits located in nonmetropolitan areas in the nationwide area for all large depository institutions.
(C)
The FDIC calculates the MSA and Nonmetropolitan Nationwide Community Development Financing Benchmarks pursuant to paragraph II.c of appendix B to this part.
(3)
Impact and responsiveness review. The FDIC reviews the impact and responsiveness of a bank's community development loans and community development investments that benefit or serve a facility-based assessment area, as provided in § 345.15.
(c)
State evaluation. The FDIC evaluates a bank's community development financing performance in a State, pursuant to §§ 345.19 and 345.28(c), using the two components in paragraphs (c)(1) and (2) of this section and assigns a conclusion for each State based on a weighted combination of those components pursuant to paragraph II.p of appendix B to this part.
(1)
Component one—weighted average of facility-based assessment area performance conclusions in a State. The FDIC considers the weighted average of the performance scores corresponding to the bank's Community Development Financing Test conclusions for its facility-based assessment areas within the State, pursuant to section IV of appendix B to this part.
(2)
Component two—State performance. The FDIC considers a bank's community development financing performance in a State using the metric and benchmarks in paragraphs (c)(2)(i) and (ii) of this section and a review of the impact and responsiveness of the bank's community development loans and community development investments in paragraph (c)(2)(iii) of this section.
(i)
Bank State Community Development Financing Metric. The Bank State Community Development Financing Metric measures the dollar volume of a bank's community development loans and community development investments that benefit or serve all or part of a State compared to deposits in the bank that are located in the State, calculated pursuant to paragraph II.d of appendix B to this part.
(ii)
Benchmarks. The FDIC compares the Bank State Community Development Financing Metric to the following benchmarks:
(A)
State Community Development Financing Benchmark. The State Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve all or part of a State for all large depository institutions compared to deposits located in the State for all large depository institutions, calculated pursuant to paragraph II.e of appendix B to this part.
(B)
State Weighted Assessment Area Community Development Financing Benchmark. The State Weighted Assessment Area Community Development Financing Benchmark is the weighted average of the bank's Assessment Area Community Development Financing Benchmarks for each facility-based assessment area within the State, calculated pursuant to paragraph II.f of appendix B to this part.
(iii)
Impact and responsiveness review. The FDIC reviews the impact and responsiveness of the bank's community development loans and community development investments that benefit or serve a State, as provided in § 345.15.
(d)
Multistate MSA evaluation. The FDIC evaluates a bank's community development financing performance in a multistate MSA, pursuant to §§ 345.19 and 345.28(c), using the two components in paragraphs (d)(1) and (2) of this section and assigns a conclusion in each multistate MSA based on a weighted combination of those components pursuant to paragraph II.p of appendix B to this part.
(1)
Component one—weighted average of facility-based assessment area performance in a multistate MSA. The FDIC considers the weighted average of the performance scores corresponding to the bank's Community Development Financing Test conclusions for its facility-based assessment areas within the multistate MSA, calculated pursuant to section IV of appendix B to this part.
(2)
Component two—multistate MSA performance. The FDIC considers a bank's community development financing performance in a multistate MSA using the metric and benchmarks in paragraphs (d)(2)(i) and (ii) of this section and a review of the impact and responsiveness of the bank's community development loans and community development investments in paragraph (d)(2)(iii) of this section.
(i)
Bank Multistate MSA Community Development Financing Metric. The Bank Multistate MSA Community Development Financing Metric measures the dollar volume of a bank's community development loans and community development investments that benefit or serve a multistate MSA compared to deposits in the bank located in the multistate MSA, calculated pursuant to paragraph II.g of appendix B to this part.
(ii)
Benchmarks. The FDIC compares the Bank Multistate MSA Community Development Financing Metric to the following benchmarks:
(A)
Multistate MSA Community Development Financing Benchmark. The Multistate MSA Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve a multistate MSA for all large depository institutions compared to deposits located in the multistate MSA for all large depository institutions, calculated pursuant to paragraph II.h of appendix B to this part.
(B)
Multistate MSA Weighted Assessment Area Community Development Financing Benchmark. The Multistate MSA Weighted Assessment Area Community Development Financing Benchmark is the weighted average of the bank's Assessment Area Community Development Financing Benchmarks for each facility-based assessment area within the multistate MSA, calculated pursuant to paragraph II.i of appendix B to this part.
(iii)
Impact and responsiveness review. The FDIC reviews the impact and responsiveness of the bank's community development loans and community development investments that benefit or serve a multistate MSA, as provided in § 345.15.
(e)
Nationwide area evaluation. The FDIC evaluates a bank's community development financing performance in the nationwide area, pursuant to § 345.19, using the two components in paragraphs (e)(1) and (2) of this section and assigns a conclusion for the institution based on a weighted combination of those components pursuant to paragraph II.p of appendix B to this part.
(1)
Component one—weighted average of facility-based assessment area performance in the nationwide area. The FDIC considers the weighted average of the performance scores corresponding to the bank's conclusions for the Community Development Financing Test for its facility-based assessment areas within the nationwide area, calculated pursuant to section IV of appendix B to this part.
(2)
Component two—nationwide area performance. The FDIC considers a bank's community development financing performance in the nationwide area using the metrics and benchmarks in paragraphs (e)(2)(i) through (iv) of this section and a review of the impact and responsiveness of the bank's community development loans and community development investments in paragraph (e)(2)(v) of this section.
(i)
Bank Nationwide Community Development Financing Metric. The Bank Nationwide Community Development Financing Metric measures the dollar volume of the bank's community development loans and community development investments that benefit or serve all or part of the nationwide area compared to deposits in the bank located in the nationwide area, calculated pursuant to paragraph II.j of appendix B to this part.
(ii)
Community Development Financing Benchmarks. The FDIC compares the Bank Nationwide Community Development Financing Metric to the following benchmarks:
(A)
Nationwide Community Development Financing Benchmark. The Nationwide Community Development Financing Benchmark measures the dollar volume of community development loans and community development investments that benefit or serve all or part of the nationwide area for all large depository institutions compared to the deposits located in the nationwide area for all large depository institutions, calculated pursuant to paragraph II.k of appendix B to this part.
(B)
Nationwide Weighted Assessment Area Community Development Financing Benchmark. The Nationwide Weighted Assessment Area Community Development Financing Benchmark is the weighted average of the bank's Assessment Area Community Development Financing Benchmarks for each facility-based assessment area within the nationwide area, calculated pursuant to paragraph II.l of appendix B to this part.
(iii)
Bank Nationwide Community Development Investment Metric. For a large bank that had assets greater than $10 billion as of December 31 in both of the prior two calendar years, the Bank Nationwide Community Development Investment Metric measures the dollar volume of the bank's community development investments that benefit or serve all or part of the nationwide area, excluding mortgage-backed securities, compared to the deposits in the bank located in the nationwide area, calculated pursuant to paragraph II.m of appendix B to this part.
(iv)
Nationwide Community Development Investment Benchmark.
(A)
For a large bank that had assets greater than $10 billion as of December 31 in both of the prior two calendar years, the FDIC compares the Bank Nationwide Community Development Investment Metric to the Nationwide Community Development Investment Benchmark. This comparison may only contribute positively to the bank's Community Development Financing Test conclusion for the institution.
(B)
The Nationwide Community Development Investment Benchmark measures the dollar volume of community development investments that benefit or serve all or part of the nationwide area, excluding mortgage-backed securities, of all large depository institutions that had assets greater than $10 billion as of December 31 in both of the prior two calendar years compared to deposits located in the nationwide area for those depository institutions, calculated pursuant to paragraph II.n of appendix B to this part.
(v)
Impact and responsiveness review. The FDIC reviews the impact and responsiveness of the bank's community development loans and community development investments that benefit or serve the nationwide area, as provided in § 345.15.
(f)
Community Development Financing Test performance conclusions and ratings—
(1)
Conclusions. Pursuant to § 345.28 and appendix C to this part, the FDIC assigns conclusions for a bank's Community Development Financing Test performance in each facility-based assessment area, each State or multistate MSA, as applicable, and for the institution. In assigning conclusions under this performance test, the FDIC may consider performance context information as provided in § 345.21(d).
(2)
Ratings. Pursuant to § 345.28 and appendix D to this part, the FDIC incorporates a bank's Community Development Financing Test conclusions into its State or multistate MSA ratings, as applicable, and its institution rating.
Notes, amendments, and revision history

Authority

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u, 2901-2908, 3103-3104, and 3108(a).

Source

Source: 89 FR 7205, Feb. 1, 2024, unless otherwise noted.

§345.25. Community development services test.

12 C.F.R. § 345.25

(a)
Community Development Services Test—
(1)
In general. Pursuant to § 345.21, the Community Development Services Test evaluates a bank's record of helping to meet the community development services needs of its entire community.
(2)
Allocation. The FDIC considers information provided by the bank and may consider publicly available information and information provided by government or community sources that demonstrates that a community development service benefits or serves a facility-based assessment area, State, or multistate MSA, or the nationwide area.
(b)
Facility-based assessment area evaluation. The FDIC evaluates a bank's community development services performance in a facility-based assessment area and assigns a conclusion for a facility-based assessment area, by considering one or more of the following:
(1)
The number of community development services attributable to each type of community development described in § 345.13(b) through (l);
(2)
The capacities in which a bank's or its affiliate's board members or employees serve (e.g., board member of a nonprofit organization, technical assistance, financial education, general volunteer);
(3)
Total hours of community development services performed by the bank;
(4)
Any other evidence demonstrating that the bank's community development services are responsive to community development needs, such as the number of low- and moderate-income individuals that are participants, or number of organizations served; and
(5)
The impact and responsiveness of the bank's community development services that benefit or serve the facility-based assessment area, as provided in § 345.15.
(c)
State, multistate MSA, or nationwide area evaluation. The FDIC evaluates a bank's community development services performance in a State or multistate MSA, as applicable, or nationwide area, and assigns a conclusion for those areas, based on the following two components:
(1)
Component one—weighted average of facility-based assessment area performance in a State, multistate MSA, or nationwide area. The FDIC considers the weighted average of the performance scores corresponding to the bank's Community Development Services Test conclusions for its facility-based assessment areas within a State, multistate MSA, or the institution pursuant to section IV of appendix B to this part.
(2)
Component two—evaluation of community development services outside of facility-based assessment areas. The FDIC may adjust upwards the conclusion based on the weighted average derived under paragraph (c)(1) of this section and an evaluation of the bank's community development services performed outside of its facility-based assessment areas pursuant to § 345.19, which may consider one or more of the factors in paragraphs (b)(1) through (5) of this section.
(d)
Community Development Services Test performance conclusions and ratings—
(1)
Conclusions. Pursuant to § 345.28 and appendix C to this part, the FDIC assigns conclusions for a bank's Community Development Services Test performance in each facility-based assessment area, each State or multistate MSA, as applicable, and for the institution. In assigning conclusions under this performance test, the FDIC may consider performance context information as provided in § 345.21(d).
(2)
Ratings. Pursuant to § 345.28 and appendix D to this part, the FDIC incorporates a bank's Community Development Services Test conclusions into its State or multistate MSA ratings, as applicable, and its institution rating.
Notes, amendments, and revision history

Authority

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u, 2901-2908, 3103-3104, and 3108(a).

Source

Source: 89 FR 7205, Feb. 1, 2024, unless otherwise noted.

§345.26. Limited purpose banks.

12 C.F.R. § 345.26

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

Authority

Authority: 12 U.S.C. 1814-1817, 1819-1820, 1828, 1831u, 2901-2908, 3103-3104, and 3108(a).

Source

Source: 89 FR 7205, Feb. 1, 2024, unless otherwise noted.