Knowledge Base

§__.12(x) Wholesale Institution Factors

§__.12(x) – 1 Q: What factors will the Agencies consider in determine whether an institution is in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers? A1. The Agencies will consider whether the institution holds itself out to the retail public as providing such loans. the institution’s revenues from extending…

§__.21(a) Application of Performance Criteria During CRA Examination

§__.21(a) – 1 Q:  How will examiners apply the performance criteria? A1. Examiners will apply the performance criteria reasonably and fairly, in accord with the regulations, the examination procedures, and this guidance. In doing so, examiners will disregard efforts by an institution to manipulate business operations or present information in an artificial light that does not…

§__.21(a) Community Development Activity Examination Weight

§__.21(a) – 2 Q:  Are all community development activities weighted equally by examiners? A2. No. Examiners will consider the responsiveness to credit and community development needs, as well as the innovativeness and complexity, if applicable, of an institution’s community development lending, qualified investments, and community development services. These criteria include consideration of the degree to which they…

§__.21(a) Evaluation of Responsiveness

§__.21(a) – 3 Q:  “Responsiveness” to credit and community development needs is either a criterion or otherwise a consideration in all of the performance tests. How do examiners evaluate whether a financial institution has been “responsive” to credit and community development needs? A3. There are three important factors that examiners consider when evaluating responsiveness: quantity, quality, and…

§__.21(a) Innovativeness Definition

§__.21(a) – 4 Q: What is meant by “innovativeness”? A4. “Innovativeness” is one of several qualitative considerations under the lending, investment, and service tests. The community development test for wholesale and limited purpose institutions similarly considers “innovative” loans, investments, and services in the evaluation of performance. Under the CRA regulations, all innovative practices or activities will be…

§__.21(b) Performance Context Definition

§__.21(b) – 1 Q: What is the performance context? A1. The performance context is a broad range of economic, demographic, and institution- and community-specific information that an examiner reviews to understand the context in which an institution’s record of performance should be evaluated. The Agencies will provide examiners with some of this information. The performance context is not…

§__.21(b)(2) Institution-Provided Performance Context

§__.21(b)(2) – 1 Q: Will examiners consider performance context information provided by institutions? A1. Yes. An institution may provide examiners with any information it deems relevant, including information on the lending, investment, and service opportunities in its assessment area(s). This information may include data on the business opportunities addressed by lenders not subject to the CRA. Institutions…

§__.21(b)(2) Examiner-Conducted Community Contact Interviews

§__.21(b)(2) – 2 Q: Will examiners conduct community contact interviews as part of the examination process? A2. Yes. Examiners will consider information obtained from interviews with local community, civic, and government leaders. These interviews provide examiners with knowledge regarding the local community, its economic base, and community development initiatives. To ensure that information from local leaders…

§__.21(b)(4) Factors Outside the Institution’s Control

§__.21(b)(4) – 1 Q: Will examiners consider factors outside of an institution’s control that prevent it from engaging in certain activities? A1. Yes. Examiners will take into account statutory and supervisory limitations on an institution’s ability to engage in any lending, investment, and service activities. For example, a savings association that has made few or no qualified investments due…

§__.21(b)(5) Past Poor CRA Performance Adverse Affect on Current Rating

§__.21(b)(5) – 1 Q: Can an institution’s assigned rating be adversely affected by poor past performance? A1. Yes. The Agencies will consider an institution’s past performance in its overall evaluation. For example, an institution that received a rating of “needs to improve” in the past may receive a rating of “substantial noncompliance” if its performance has not improved….