§__.12(t) Mortgage-Backed Securities or Municipal Bonds
§__.12(t) – 2 Q: Are mortgage-backed securities or municipal bonds “qualified investments”? A2. As a general rule, mortgage-backed securities and municipal bonds are not qualified investments because they do not have as their primary purpose community development, as defined in the CRA regulations. Nonetheless, mortgage-backed securities or municipal bonds designed primarily to finance community development generally are…
§__.12(t) FHLB Stocks or Federal Reserve Reserves
§__.12(t) – 3 Q: Are FHLB stocks or unpaid dividend and membership reserves with the Federal Reserve Banks “qualified investments” A3. No. FHLB stocks or unpaid dividends, and membership reserves with the Federal Reserve Banks do not have a sufficient connection to community development to be qualified investments. However, FHLB member institutions may receive CRA consideration as a…
§__.12(t) Qualified Investment Examples
§__.12(t) – 4 Q: What are examples of qualified investments? A4. Examples of qualified investments include, but are not limited to, investments, grants, deposits, or shares in or to: Financial intermediaries (including CDFIs, New Markets Tax Credit-eligible Community Development Entities, CDCs, minority- and women-owned financial institutions, community loan funds, and low-income or community development credit unions) that…
§__.12(t) Charitable Contributions
§__.12(t) – 5 Q: Will an institution receive consideration for charitable contributions as “qualified investments”? A5. Yes, provided they have as their primary purpose community development as defined in the regulations. A charitable contribution, whether in cash or an in-kind contribution of property, is included in the term “grant.” A qualified investment is not disqualified because an…
§__.12(t) Lost Income from Below Market Loan Rates
§__.12(t) – 6 Q: An institution makes or participates in a community development loan. The institution provided the loan at below-market interest rates or “bought down” the interest rate to the borrower. Is the lost income resulting from the lower interest rate or buy-down a qualified investment? A6. No. The Agencies will, however, consider the responsiveness,…
§__.12(t) Employee Wages and Contributions
§__.12(t) – 7 Q: Will the Agencies consider as a qualified investment the wages or other compensation of an employee or director who provides assistance to a community development organization on behalf of the institution? A7. No. However, the Agencies will consider donated labor of employees or directors of a financial institution as a community development service if…
§__.12(t) Prior-Period Investment Consideration
§__.12(t) – 8 Q: When evaluating a qualified investment, what consideration will be given for prior-period investments? A8. When evaluating an institution’s qualified investment record, examiners will consider investments that were made prior to the current examination, but that are still outstanding. Qualitative factors will affect the weight given to both current period and outstanding prior-period…
§__.12(t) Organization Re-Investments to Earn Income
§__.12(t) – 9 Q: How do examiner evaluate loans or investments to organization that, in turn, invest in investments that do not have a community development purpose, and use only the income, or a portion of the income, from those investments to support their community development purpose? A9. Examiners will give quantitative consideration for the dollar amount…
§__.12(u) Foreign Branch Assets
§__.12(u) – 1 Q: How are Federal and state branch assets of a foreign bank calculated for purposes of the CRA? A1. A Federal or state branch of a foreign bank is considered a small institution if the Federal or state branch has assets less than the asset threshold delineated in 12 CFR .12(u)(1) for small institutions….
§__.12(u)(2) Institution Asset Size Threshold Adjustment
§__.12(u)(2) – 1 Q: How often will the asset size thresholds for small institutions and intermediate small institutions be changed, and how will these adjustments be communicated? A1. The asset size thresholds for “small institutions” and “intermediate small institutions” will be adjusted annually based on changes to the Consumer Price Index. More specifically, the dollar thresholds will be…