The Office of the Comptroller of the Currency (OCC), noting regulators’ ongoing work to modernize the Community Reinvestment Act (CRA) regulations, on Friday issued a set of clarifications to its current supervisory policies and practices regarding (CRA) evaluations of banks and savings institutions.
The OCC, Federal Reserve Board and Federal Deposit Insurance Corp. (FDIC) are expected to issue a request for comments on CRA rules addressing, among other things, a potential expansion in both the types of activities and service areas eligible for consideration in banks’ CRA evaluations. So far, regulators have only discussed broad themes of a coming advance notice of proposed rulemaking (ANPR), which could be released at any time. Meanwhile, the OCC said in a bulletin Friday that it has clarified and simplified its policies “to promote the consistency and effectiveness of CRA performance evaluations.”
The clarifications are in OCC Bulletin 2018-17 (“Supervisory Policy and Processes for Community Reinvestment Act Performance Evaluations”) and apply to all CRA evaluations. Clarifications “effective immediately” address the following:
- implementation of full-scope and limited-scope reviews;
- consideration of activities that promote economic development;
- use of demographic, aggregate, and market share data;
- evaluation of the borrower distribution of loans outside bank assessment areas (AA);
- evaluation frequency and timing;
- the CRA performance evaluation period; and
- evaluation of home mortgage loans.
Additionally, the bulletin notes clarifications implemented in May 2017 for standard processes related to CRA evaluations. These address:
- the type of information considered and presented in the written performance evaluation (PE) and the process for sharing CRA evaluation data and ratings with OCC-supervised banks;
- factors considered when evaluating bank performance under the small- and large-bank lending tests;
- branch distribution when concluding on the availability and effectiveness of bank systems for delivering retail banking services;
- internal and external performance context factors when concluding on performance.
- consideration of CRA plans imposed as conditions of approval of corporate applications in the evaluation process.
“These policies and processes apply to the evaluations of all OCC-supervised banks subject to the CRA, regardless of the bank’s asset size or CRA evaluation type,” the bulletin says. “Transitional procedures are being implemented. If banks with CRA evaluations in progress believe these policies will create a burden during an ongoing evaluation, they should raise this concern with their examiners.”
The frequency of a bank’s CRA evaluations is based on OCC policy and limits for smaller banks under the Gramm-Leach-Bliley Act (GLBA). Banks that have total assets of more than $250 million are to be evaluated under CRA every 36 to 48 months: banks with less than 30 rating areas at the previous CRA evaluation are subject to a 36-month evaluation cycle; those with 30 or more rating areas at the previous CRA examination are subject to a 48-month CRA evaluation cycle.
As provided under the GLBA, the OCC may conduct a CRA evaluation for banks with assets of $250 million or less no sooner than 48 months after the previous evaluation if the banks received ratings of “satisfactory”; and no sooner than 60 months after the previous evaluation if they received ratings of “outstanding.”
The OCC says that effective June 1, 2018, it has rescinded its previous “Large Bank CRA Examiner Guidance,” issued December 29, 2000, and transmitted publicly by OCC Bulletin 2000-35.