OCC: CRA Guidelines for Requesting Approval of a Strategic Plan

OCC BULLETIN 2019-39

Summary

The Office of the Comptroller of the Currency (OCC) is issuing this bulletin to inform national banks, federal savings associations, and federal branches of foreign banking organizations (collectively, banks) about current guidelines for requesting approval to be evaluated under the Community Reinvestment Act (CRA) using the strategic plan option or to request approval to amend an approved CRA strategic plan. This bulletin rescinds

• OCC Bulletin 1996-11, “Community Reinvestment Act: Guidelines for Approval for a Strategic Plan & Wholesale or Limited Purpose Institution.”
• Office of Thrift Supervision CEO Memo 268, “Strategic Plan and Wholesale/Limited Purpose Designations Under the CRA.”

Note for Community Banks

These guidelines apply to all OCC-supervised banks subject to the CRA that wish to request CRA evaluation based on a strategic plan or to request approval to amend an approved strategic plan.

Highlights

These guidelines do not represent new requirements but instead summarize the OCC’s process for addressing bank requests for approval or amendment of a CRA strategic plan, including

• information that a bank should provide to substantiate its request.
• the email address for banks to submit requests.
• the OCC’s review and approval processes.

Background

Banks may elect to have their performance under the CRA evaluated on the basis of a pre-approved strategic plan that addresses their CRA responsibilities. The CRA regulations require that the strategic plan be developed in consultation with members of the public, be published for public comment, and contain measurable annual goals.¹The required contents of a strategic plan and the OCC’s criteria for evaluating a strategic plan are specified in the CRA regulations.² The CRA strategic plan evaluation option provides a bank with the opportunity to tailor its CRA objectives to the needs of its community and to its own capacities, business strategies, and expertise. Therefore, not all of the factors described in the regulations under other evaluation types³ would necessarily apply to each strategic plan.

The guidelines in this bulletin are intended to serve as guidance when preparing a CRA strategic plan and submitting it to the OCC for approval under the regulations.⁴These guidelines specify the types of information that a bank should submit in requesting CRA performance evaluation on the basis of a strategic plan, requesting approval of the bank’s strategic plan, and requesting approval for amendments to an approved strategic plan. In addition to the items listed in this bulletin, a bank may submit any other information that it considers relevant to the OCC’s decision.

Performance Context

The OCC evaluates a CRA strategic plan in the context of information described in 12 CFR 25.21(b) (national banks and federal branches) and 12 CFR 195.21(b) (savings associations). This performance context information could include, as appropriate: demographic data on median income; distribution of household income; housing costs; lending, investment and service opportunities in the bank’s assessment area(s); the bank’s product offerings and business strategy; bank capacity and constraints (including the bank’s size and financial condition and economic climate); the bank’s past performance; and relevant information from the bank’s public file. A bank generally does not need to supply more information regarding the performance context than the bank would normally develop to prepare a business plan or to identify potential customers, including low- and moderate-income individuals or geographies in the bank’s assessment area(s). The OCC considers information submitted by the bank along with information that the OCC obtains from community, government, or civic groups, and other sources.

Public Comments

Obtaining information from the public when developing the strategic plan helps to provide a bank access to the fullest possible information about the lending, investment, and service needs of its community and how those needs may be met. Public comment is important to, but not solely determinative of, the OCC’s decision on strategic plan approval. The OCC reviews public comments to determine if the bank offered the opportunity for community input into the strategic plan, the public’s degree of support for the bank’s goals, and the appropriateness of the strategic goals. The OCC considers, as necessary, other information regarding the performance context in addition to the public comments and information submitted by the bank.

Election of Alternative Assessment Method

A bank may elect to be evaluated under an alternative assessment method in its strategic plan in the event that it fails to substantially meet the strategic plan’s goals for a satisfactory rating. Alternatively, the bank may elect to have its CRA performance evaluated under the (1) lending, investment, and service tests; (2) community development test; or (3) small-bank performance standards, whichever is appropriate. If such an election is not made in the strategic plan, the OCC evaluates the bank only under the strategic plan. Failure to substantially meet the goals set forth for satisfactory performance generally results in assignment of a rating of “needs to improve” or “substantial noncompliance.”⁵

Preparation and Submission of a Strategic Plan

Before submitting a bank’s initial strategic plan for OCC approval, bank management is encouraged to contact the bank’s supervisory office to request an informal consultation with OCC staff. The supervisory office schedules a consultation that generally includes staff from the supervisory office and other OCC offices.

A bank must submit its strategic plan to the OCC at least three months before the proposed effective date of the strategic plan.⁶ If a strategic plan covers more than one affiliated bank, at least one of which is regulated by an agency other than the OCC, a copy of the entire strategic plan should be submitted to each federal bank regulatory agency that has primary supervisory responsibility for the bank(s) covered by the strategic plan. If a strategic plan is being submitted on behalf of more than one bank, each bank must receive the approval of its own regulatory agency for the portions of the strategic plan relating to that bank’s CRA responsibilities.

To request the OCC’s approval of a strategic plan or amendment of an approved strategic plan, a bank should submit its strategic plan(s) and supporting information by email to CRA WLP-SP Requests@occ.treas.gov using the subject line “CRA Strategic Plan.” Banks should direct questions regarding the process, preparation of a request for approval, or a pending submission by sending an email to CRA WLP-SP Requests@occ.treas.gov, calling (202) 649-5470, or contacting their supervisory office. Each request for approval of a strategic plan should name a contact person at the bank. Strategic plans that include more than one affiliated bank may designate a single contact person for all the banks covered by the strategic plan or may list separate contacts for one or more of the affiliated banks. A bank must submit the information necessary to demonstrate that the strategic plan meets the criteria for approval.⁷ The OCC may require the bank to submit additional information that the OCC deems necessary to make a determination on the strategic plan.

Upon receipt of the strategic plan, the OCC will send an acknowledgment of receipt to the bank. OCC staff reviews the strategic plan and related material as submitted to determine whether the request is complete. A request for approval of a strategic plan is deemed complete when all relevant information has been received. If the request is deemed incomplete, the OCC notifies the requesting bank(s) and sends a request for additional information to the bank’s contact person(s). If information initially furnished with the request changes significantly during the processing of the bank’s request, the bank should communicate those changes promptly. The OCC evaluates the strategic plan and all supporting information under the evaluation criteria set forth in 12 CFR 25.21(b) and 12 CFR 25.27(g)(3) and appendix A(e) (national banks and federal branches) or 12 CFR 195.21(b) and 12 CFR 195.27(g)(3) and appendix A(e) (savings associations).

Each request for approval of a strategic plan submitted to the OCC must contain a proposed effective date.⁸ The proposed effective date must be at least three months after the request is submitted to the OCC. The bank is not evaluated under a strategic plan until the bank has been operating under an approved and effective strategic plan for at least one year.⁹

Notification of Decision

The OCC will notify the bank in writing of the decision to approve or deny the request within 60 days of receiving a complete request. The OCC may extend the review period for good cause and notifies the bank in writing of any extension of the review period, the reason for the extension, and the date by which the agency expects to act on the request. If the OCC fails to act within this time period, the strategic plan is considered approved.¹⁰

If a strategic plan covering multiple banks must be approved by more than one regulatory agency, each agency issues a decision approving or denying the request with respect to the bank(s) for which that agency has primary supervisory responsibility.

Confidentiality

Under the provisions of the Freedom of Information Act (FOIA) (5 USC 552), a request for approval of a strategic plan submitted to the OCC is a public document and is available to the public upon request. The OCC’s decision approving or denying a strategic plan may also be available to the public under the FOIA. Pursuant to 12 CFR 25.27(f)(2) (national banks and federal branches) and 12 CFR 195.27(f)(2) (savings associations), a bank may submit information along with its strategic plan to the OCC on a confidential basis, but the goals stated in the strategic plan must be sufficiently specific to enable the public and the OCC to judge the merits of the strategic plan.

A bank may request confidential treatment for confidential commercial information, meaning records that arguably contain material exempt from release under Exemption 4 of the FOIA.¹¹ For example, if the requesting bank believes that disclosure of commercial or financial information included with its request would likely result in substantial harm to its competitive position or that of its affiliates, confidential treatment of such information may be requested. This request for confidential treatment must be submitted in writing concurrently with the submission of the confidential information and must discuss in detail the justification for confidential treatment. The bank’s request for confidentiality should explain the harm that would result from public release of the information.

Information for which confidential treatment is sought should be (1) segregated from the other information that is submitted; (2) specifically identified in the non-confidential portion of the strategic plan (by reference to the confidential section); and (3) labeled “Confidential.” The requesting bank should follow this same procedure on confidentiality with regard to filing any supplemental information for which confidential treatment is sought. The OCC determines whether information labeled “Confidential” warrants confidentiality and advises the requesting bank of any decision to make information labeled “Confidential” available to the public.

A bank should follow the guidance in this section when submitting confidential supervisory information, which includes any information contained in, related to, or derived from reports of examination, or confidential operating and condition reports.

Requested Information

The requirements for a strategic plan are contained in the CRA regulations, 12 CFR 25.27 (national banks and federal branches) and 12 CFR 195.27 (savings associations). A bank requesting approval for a strategic plan is expected to submit the following, plus any additional supporting information bank management may wish to provide:

1. The names of each bank joining in the strategic plan and a description of how they are affiliated. Note that the appropriate federal banking agencies approve a joint strategic plan only if the strategic plan provides measurable goals for each bank for each assessment area covered by the strategic plan.
2. For each bank, an identification of the assessment area(s) covered by the strategic plan, including a list of the geographies involved. A bank with more than one assessment area may prepare (1) a single strategic plan for all of its assessment areas or (2) one or more strategic plans for one or more of its assessment areas.
3. The proposed term of the strategic plan. A strategic plan may have a term of no more than five years.¹²
4. The proposed effective date for the strategic plan, which should be at least three months after the strategic plan is submitted to the OCC.
5. A description of the bank’s efforts to seek suggestions from members of the public, copies of written public comment(s) received, and, if the strategic plan was revised in light of the comment(s) received, the initial strategic plan as released for public comment.¹³
6. A copy of the required public notice and the name(s) of the newspaper(s) in which the required notice was published.
7. For each assessment area for each bank covered by the strategic plan, copies of any information developed in the bank’s normal business planning that it wants the OCC to consider regarding lending, investment, and service opportunities in the assessment area, including a description of any legal constraints or limitations that affect the type of loans, investments, or services that the bank may make or offer.
8. For each bank covered by the strategic plan, measurable goals for helping to meet the credit needs of each assessment area covered by the strategic plan, particularly the needs of low- and moderate-income geographies and individuals.¹⁴ If the bank’s strategic plan encompasses the activities of non-depository bank affiliates, it is not necessary to state separate goals for each non-bank affiliate.
   
   Generally, a bank’s strategic plan must address all three performance categories (i.e., lending, investments, and services), with an emphasis on lending and lending-related activities; the strategic plan nevertheless need not specify measurable goals in all three categories if the bank chooses a different emphasis. A focus on one or more performance categories may be appropriate if responsive to the characteristics and credit needs of the bank’s assessment area(s), considering public comment and the bank’s capacity and constraints, product offerings, and business strategy.¹⁵
9. For each assessment area for each bank covered by the strategic plan:
   1. The plan must include measurable goals that, if met, would constitute “satisfactory” performance.¹⁶ Measurable goals should be stated in quantifiable terms. Banks are, however, provided flexibility in specifying goals. For example, a bank may provide ranges of lending amounts in different categories of loans. It could also be appropriate for a bank to plan to make a certain number of loans or to lend a specific amount in a particular area or with respect to a particular project. A bank might plan to provide community services measured in terms of the frequency of use or amount of staff resources involved. In addition, a bank could provide a menu of activities, each with a weighted point value, from which a measurable goal could be stated in point totals. Measurable goals may be linked to funding requirements of certain public programs or indexed to other external factors as long as these mechanisms provide a quantifiable standard.
   2. Multi-year strategic plans must include annual interim measurable goals.¹⁷
   3. The bank’s strategic plan may also include measurable goals for any bank covered by the strategic plan that, if met, would constitute “outstanding” performance for that bank.
10. For each bank covered under the strategic plan, whether the bank elects in its strategic plan to be evaluated under another assessment method (e.g., small, intermediate small, or large bank assessment method) if the bank fails to meet substantially the strategic plan goals for a satisfactory rating.¹⁸

Plan Amendment

During the term of an approved strategic plan, a bank may request approval of an amendment to the strategic plan if there is a material change in circumstances (e.g., a downturn in the economic environment, a shift in the bank’s business strategy, or entrance into or exit from one or more assessment areas). Public participation is required in the development of an amendment to a previously approved strategic plan.¹⁹ To request approval by the OCC of a strategic plan amendment, a bank should submit with its request the information required in items 5 and 6 under the “Requested Information” section of this bulletin.

Further Information

Please contact your supervisory office or the OCC’s Bank Supervision Policy Department, Compliance Risk Policy Division, at (202) 649-5470.

Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy

¹12 CFR 25.27 (national banks and federal branches) and 12 CFR 195.27 (savings associations).

² Refer to 12 CFR 25.27 (national banks and federal branches) and 12 CFR 195.27 (savings associations).

³ Refer to 12 CFR 25.21(a)(1)-(3) (national banks and federal branches) and 12 CFR 195.21(a)(1)-(3) (savings associations).

⁴ 12 CFR 25.27 (national banks and federal branches) and 12 CFR 195.27 (savings associations).

⁵ Refer to 12 CFR 25, appendix A(e), “Strategic Plan Assessment and Rating” (national banks and federal branches), and 12 CFR 195, appendix A(e), “Strategic Plan Assessment and Rating” (savings associations).

⁶ Refer to 12 CFR 25.27(e) (national banks and federal branches) and 12 CFR 195.27(e) (savings associations).

⁷ Refer to 12 CFR 21.21(b) and 25.27(g)(3) (national banks and federal branches), and 12 CFR 195.21(b) and 195.27(g)(3) (savings associations).

⁸ Refer to 12 CFR 25.27(e) (national banks and federal branches) and 12 CFR 195.27(e) (savings associations).

⁹ Refer to 12 CFR 25.27(a)(4) (national banks and federal branches) and 12 CFR 195.27(a)(4) (savings associations).

¹⁰ Refer to 12 CFR 25.27(g)(1) (national banks and federal branches) and 12 CFR 195.27(g)(1) (savings associations).

¹¹ 5 USC 552(b)(4).

¹² Refer to 12 CFR 25.27(c) (national banks and federal branches) and 12 CFR 195.27(c) (savings associations).

¹³ Refer to 12 CFR 25.27(e) (national banks and federal branches) and 12 CFR 195.27(e) (savings associations).

¹⁴ Refer to 12 CFR 25.27(f)(1)(i) (national banks and federal branches) and 12 CFR 195.27(f)(1)(i) (savings associations).

¹⁵ Refer to 12 CFR 25.27(f)(1)(ii) (national banks and federal branches) and 12 CFR 195.27(f)(1)(ii) (savings associations).

¹⁶ Refer to 12 CFR 25.27(f)(3) (national banks and federal branches) and 12 CFR 195.27(f)(3) (savings associations).

¹⁷ Refer to 12 CFR 25.27(c) (national banks and federal branches) and 12 CFR 195.27(c) (savings associations)

¹⁸ Refer to 12 CFR 25.27(f)(4) (national banks and federal branches) and 12 CFR 195.27(f)(4) (savings associations).

¹⁹ Refer to 12 CFR 25.27(h) (national banks and federal branches) and 12 CFR 195.27(h) (savings associations).