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June 29, 2021
Implementation of the Community Reinvestment Act by the
Office of the Comptroller of the Currency
Introduction
The Community Reinvestment Act(CRA; P.L. 95-128)
addresses how banking institutions meet the credit needs of
the areas they serve, particularly in low- and moderate-
income (LMI) neighborhoods. The federal banking
regulatory agencies-the Federal Reserve, the Federal
Deposit Insurance Corporation (FDIC), and the Office of
the Comptroller of the Currency (OCC)-currently
implement the CRA. The regulators is sue CRA credits, or
points, to banks participating in qualifying activities (e.g.,
mortgage, consumer, andbusiness lending; community
investments; and low-cost services that would benefit LMI
areas and entities) that occur within their designated
assessment areas, locations where they collect deposits.
These credits are then used to is sue a composite rating of a
bank's performance. TheCRA requires theseratings to be
taken into account whenbanks apply for branches, mergeis,
and acquisitions, among other things.
While federalbankregulators typically engagein joint
CRA rulemaking, the OCC on June 5, 2020, published a
final rule updating its CRA framework that applies only to
the banks it directly supervises. On May 18, 2021, the OCC
announced that it would reconsider the rule. The OCC
initially had different periods of compliance with the fmal
rule and amendments that were generally effective on
October 1, 2020. While this reconsideration is ongoing, the
OCC stated that it will not object to the suspension of
activities related to compliance with later dates. This
InFocus discusses how the CRA presumptive ratings for a
bankwould be constructed under the OCC's updated
framework that is currently under reconsideration. (On
September 21,2020, the Federal Reserve released an
Advanced Noticeof Proposed Rulemaking to obtain
feedback on its tentative plans to update the CRA
framework for the banking entities it supervises. The
existing CRA framework that remains in place by the
Federal Reserve and the FDICis discussed in CRS Report
R43661, The Effectiveness ofthe Community Reinvestment
Act, by Darryl E. Getter.)
OCC Banks Covered by Final Rule
Small and intermediate banks are generally exempted from
being evaluated under the OCC's updated framework, but
they may opt in. Small banks are defined as having assets of
$600 million or less; intermediate banks are defmed as
having more assets than a smallbankbut less than $2.5
billion in assets. In the fmalrule, small banks and
intermediate banks may continue to comply with the
existing CRA performance standards andreceive composite
ratings. Large banks, defined as having more than $2.5
billion in assets, must be evaluatedunder the new general
performance standards and receive presumptive ratings.
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Regardless of the CRA framework, small and intermediate
banks may stilluse the CRA Illustrative List, which lists
CRA activities or qualifying activities eligible forCRA
credit. (The OCC is to provide a CRA illustrative list of
activities thatwouldbe updated annually andpublishedin
the Federal Register every three years.) Small and
intermediate banks must also delineate their as sessment
areas under the revised framework. As sessment areas under
the revised framework consist of two p arts. The first part is
a facility-based assessment area, which is basedupon a
bank's geographicalpresence where it originates or
purchases a substantial portion ofits retailloans. If a bank
receives 50% or more of its retail domestic deposits from
geographic areas outside of its facility -based as sessment
area, then a secondpart-a deposit-based assessment
area(s) consisting of (non-overlapping) areas where at least
5% oftotalretaildeposits are sourced-is added.
The Revised General Performance
Standards and Presumptive Rating
The OCC's updated general performance standards
framework consist of three tests: a CRA evaluation test, a
retail lending distribution test, and a community
development (CD) minimum test. The three test results are
compiled to determine the presumptive rating.
The CRA Evaluation Test
The CRA evaluation metric is computed using the formula:
[(aggregate value ofall CRA qualifyingactivities)/(retail
domestic deposits) + 0.01(branches in specifed
areas)/(total branches)]. The first ratio in the formula-
(aggregate value of all CRA qualifying activities)/(retail
domestic deposits)-represents the percentage ofa bank's
deposits usedto support allCRA activities. The numerator
consists of the aggregate dollar value of eligible CRA
activities-CRA loans, CRA investments, and CRA
services, which may (or may not) be included on the CRA
Illustrative List-conducted by the bank over the
examination period. The denominator consists of domestic
retail (non-brokered) deposits. The second ratio represents
the bank's socialpresence andeconomic impact in targeted
areas. The numerator of the ratio consists of a bank's
branches in specific areas (e.g., LMI areas, Indian country,
underserved areas, and dis tressed areas). The denominator
consists of a bank's total branches. Hence, the second ratio
is the percentage of a bank's branches in targeted areas
relative to all of its branches. After multiplying the second
ratio by 0.01 and adding theproduct to the first ratio, the
sumequals theCRA evaluation measure.
The final rule allows for the use of multipliers to adjust the
dollar values ofcertain CRA activities for various
circumstances. The multipliers would be applied to the
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