[Federal Register Volume 78, Number 224 (Wednesday, November 20, 2013)]
[Notices]
[Pages 69671-69680]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27738]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

[Docket ID OCC-2013-0003]

FEDERAL RESERVE SYSTEM

[Docket No. OP-1456]

FEDERAL DEPOSIT INSURANCE CORPORATION


Community Reinvestment Act; Interagency Questions and Answers 
Regarding Community Reinvestment; Notice

AGENCY: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Notice.

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SUMMARY: The OCC, Board, and FDIC (collectively, the Agencies) are 
adopting as final the Interagency Questions and Answers Regarding 
Community Reinvestment that were proposed on March 18, 2013, to address 
several community development issues. In response to comments received, 
the Agencies made minor clarifications to some of the new and revised 
questions and answers that were proposed.

DATES: Effective: November 20, 2013.

FOR FURTHER INFORMATION CONTACT: OCC: Bobbie K. Kennedy, Bank Examiner, 
Compliance Policy Division, (202) 649-5470; or Margaret Hesse, Senior 
Counsel, Community and Consumer Law Division, (202) 649-6350, Office of 
the Comptroller of the Currency, 400 7th Street SW., Washington, DC 
20219.
    Board: Catherine M. J. Gates, Senior Project Manager, (202) 452-
2099; or Theresa A. Stark, Senior Project Manager, (202) 452-2302, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW., 
Washington, DC 20551.
    FDIC: Patience R. Singleton, Senior Policy Analyst, Supervisory 
Policy Branch, Division of Depositor and Consumer Protection, (202) 
898-6958; Pamela A. Freeman, Senior Examination Specialist, Compliance 
& CRA Examinations Branch, Division of Depositor and Consumer 
Protection, (202) 898-3656; or Surya Sen, Section Chief, Supervisory 
Policy Branch, Division of Depositor and Consumer Protection, (202) 
898-6699; or Richard M. Schwartz, Counsel, Legal Division, (202) 898-
7424, Federal Deposit Insurance Corporation, 550 17th Street NW., 
Washington, DC 20429.

SUPPLEMENTARY INFORMATION: 

Background

    The OCC, Board, and FDIC implement the Community Reinvestment Act 
(CRA) (12 U.S.C. 2901 et seq.) through their CRA regulations. See 12 
CFR parts 25, 195, 228, and 345. The Agencies' regulations are 
interpreted primarily through the ``Interagency Questions and Answers 
Regarding Community Reinvestment'' (Questions and Answers), which 
provide guidance for use by agency personnel, financial institutions, 
and the public. The Questions and Answers were first published under 
the auspices of the Federal Financial Institutions Examination Council 
(FFIEC) in 1996 (61 FR 54647) and were last revised by the Agencies on 
March 11, 2010 (2010 Questions and Answers) (75 FR 11642).
    On March 18, 2013, the Agencies published for comment proposed 
clarifications that would revise five questions and answers (Q&A), 
which address (i) community development activities outside an 
institution's assessment area(s), both in the broader statewide or 
regional area that includes the institution's assessment area(s) and in 
nationwide funds; (ii) additional ways to determine whether recipients 
of community services are low- or moderate-income; and (iii) technical 
assistance activities related to the provision of financial services 
that might be provided to community development organizations.\1\ The 
Agencies also proposed two new Q&As: One addresses the treatment of 
community development lending performance in determining a large 
institution's lending test rating, and the other addresses the 
quantitative consideration given to a certain type of community 
development investment. Finally, the Agencies proposed to

[[Page 69672]]

redesignate one Q&A without substantive change.
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    \1\ See 78 FR 16765 (Mar. 18, 2013).
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    Together, the Agencies received comments from approximately 200 
different parties. The commenters represented financial institutions 
and their trade associations, community development advocates and 
organizations, state bank supervisors, and others. The commenters 
generally noted that the proposed changes were a modest, but 
beneficial, effort to modernize the implementation of CRA. Commenters 
largely supported the intent of the Agencies to encourage more 
community development activity, particularly outside large metropolitan 
areas that are well served by financial institutions. Many commenters 
expressed concern nonetheless about potential unintended consequences 
in the proposed changes and provided suggestions for improvement. 
Comments on each revised and new proposed Q&A are discussed in more 
detail below.
    As discussed below, the Agencies adopt the five revised and two new 
Q&As that were proposed, with minor clarifications as appropriate, in 
response to comments received. The Agencies also redesignate one Q&A 
without substantive change.
    The new and revised Q&As that the Agencies are adopting supplement 
the 2010 Questions and Answers. The revised Q&As replace the Q&As of 
the same citation designation in the 2010 Questions and Answers. The 
Agencies are currently revising examination procedures to implement 
this final guidance to promote consistent application of the guidance 
within and among the Agencies.
    The Questions and Answers are grouped by the provision of the CRA 
regulations that they discuss, are presented in the same order as the 
regulatory provisions, and employ an abbreviated method of citing to 
the regulations. For example, the small bank performance standards for 
national banks appear at 12 CFR 25.26; for savings associations, the 
small savings association performance standards appear at 12 CFR 
195.26; for Federal Reserve System member banks supervised by the 
Board, the standards appear at 12 CFR 228.26; and for state nonmember 
banks, they appear at 12 CFR 345.26. Accordingly, the citation would be 
12 CFR ----.26. Each Q&A is numbered using a system that consists of 
the regulatory citation and a number, connected by a dash. For example, 
the first Q&A addressing 12 CFR --.26 would be identified as Sec.  --
--.26-1.

Revisions of Existing Q&As

I. Community Development Activities Outside an Institution's Assessment 
Area(s) in the Broader Statewide or Regional Area That Includes the 
Institution's Assessment Area(s)

    The CRA regulations allow consideration of community development 
loans, qualified investments, and community development services that 
benefit an institution's assessment area(s) or a broader statewide or 
regional area that includes the institution's assessment area(s). See 
12 CFR ----.12(h)(ii), ----.23(a), and ----.24(b). In 2001,\2\ the 
Agencies adopted the versions of Q&As Sec.  ----.12(h)-6 and Sec.  --
--.12(h)-7 that are found in the 2010 Questions and Answers to help 
assure financial institutions that community development loans and 
services and qualified investments in the broader statewide or regional 
area that includes their assessment area(s) would receive consideration 
in their CRA evaluations. However, the Agencies had become aware that 
both financial institutions and community organizations needed 
additional guidance on how, and to what extent, the Agencies considered 
community development activities in the broader statewide or regional 
area when conducting CRA evaluations. Accordingly, the Agencies 
proposed to revise Q&As Sec.  ----.12(h)-6 and Sec.  ----.12(h)-7 to 
further clarify that community development activities in the broader 
statewide or regional area that includes an institution's assessment 
area(s) will be considered in the evaluation of an institution's CRA 
performance.
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    \2\ See 66 FR 36620 (July 12, 2001). Q&As Sec.  ----.12(h)-6 and 
Sec.  ----.12(h)-7 were previously designated as Sec.  ----.12(i) & 
Sec.  ----563e.12(h)-5 and Sec.  ----.12(i) & 563e.12(h)-6. See 66 
FR 36626-27.
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    Q&A Sec.  ----.12(h)-6 addressed how examiners would consider 
community development activities in the broader statewide or regional 
area that includes an institution's assessment area(s) and 
differentiated between whether or not the institution's assessment 
area(s) might receive a direct benefit from the activity. The Agencies 
believed that Q&A Sec.  ----.12(h)-6 needed additional clarification 
with regard to community development activities that benefit 
geographies or individuals located somewhere within a broader statewide 
or regional area that includes the institution's assessment area(s) but 
that will not benefit the institution's assessment area(s). Q&A Sec.  
----.12(h)-6 had stated that examiners would consider such activities 
if an institution, considering its performance context, had adequately 
addressed the community development needs of its assessment area(s).
    First, the Agencies proposed to revise Q&A Sec.  ----.12(h)-6 by 
removing the phrase ``adequately addressed the community development 
needs of its assessment area(s).'' In its place, the Agencies proposed 
to state that community development activities located in the broader 
statewide or regional area that includes an institution's assessment 
area(s) but that will not benefit those assessment area(s) ``must be 
performed in a safe and sound manner, consistent with the institution's 
capacity to oversee those activities and may not be conducted in lieu 
of, or to the detriment of, activities in the institution's assessment 
area(s). When evaluating whether community development activities are 
being conducted in lieu of, or to the detriment of, activities in the 
institution's assessment area(s), examiners will consider an 
institution's performance context, including the community development 
needs and opportunities in its assessment area(s), its business 
capacity and focus, and its past performance.''
    The Agencies received about 143 comments addressing proposed 
revised Q&A Sec.  ----.12(h)-6. Commenters were generally supportive of 
the Agencies' effort to clarify when and how community development 
activities in the broader statewide or regional area that includes an 
institution's assessment area(s) would receive consideration. However, 
commenters provided mixed views on whether the proposed clarifications 
would provide an incentive for financial institutions to increase their 
community development activities or expand their opportunities to 
engage in community development activities. For example, one commenter 
stated that institutions' community development activities would depend 
more on whether opportunities exist within a given state or region and 
the expertise of the institutions than on the Agencies' proposed 
revisions to the Q&A. On the other hand, another commenter stated that 
the proposed revisions might encourage institutions to expand their 
community development activities.
    The vast majority of the commenters stated that the proposed 
language, ``may not be conducted in lieu of, or to the detriment of, 
activities in the institution's assessment area(s),'' would generate 
more uncertainty than the existing language, ``adequately addressed the 
community development needs of its assessment area(s).'' Several 
commenters stated that the proposed

[[Page 69673]]

language would be an impossible standard to meet because any activity 
performed outside an institution's assessment area(s) would be ``in 
lieu of'' activities in the assessment area(s). Some commenters 
advocated that the Agencies should adopt a flexible approach, while 
other commenters suggested bright-line standards, such as an 
institution having received a certain rating on its previous CRA 
evaluation. One commenter suggested that the existing phrase, 
``adequately addressed the community development needs of its 
assessment area(s),'' would be preferable to the proposed language if 
the Agencies also defined the term ``adequately.'' A few commenters 
also contended that, because all CRA-related activities must be 
performed in a safe and sound manner, the proposed language stating 
that ``such community development activities must be performed in a 
safe and sound manner consistent with the institution's capacity to 
oversee those activities'' was unnecessary. Further, some commenters 
maintained that the proposed reference to the institution's ability to 
oversee those activities appeared to impose a duty upon the investing 
financial institution to oversee independent community development 
programs.
    The Agencies are modifying the proposed language in Q&A Sec.  --
--.12(h)-6 to address some of these comments. First, the Agencies note 
that all CRA-related activities must be performed in a safe and sound 
manner.\3\ Therefore, the Agencies agree that express reference to such 
activities being performed in a safe and sound manner in Q&A Sec.  --
--.12(h)-6 may not be necessary. Accordingly, the Agencies are not 
adopting the proposed statement that such ``community development 
activities must be performed in a safe and sound manner consistent with 
the institution's capacity to oversee those activities . . .'' However, 
the Agencies emphasize the continued expectation that an institution's 
activities be consistent with safe and sound operation of the 
institution.
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    \3\ See 12 CFR ----.21(d).
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    Second, among other purposes, the Agencies' proposed clarifications 
to Q&A Sec.  ----.12(h)-6 were intended to encourage more community 
development investments in communities that are underserved by 
financial institutions. However, as noted above, commenters expressed 
concerns that the proposed phrase ``in lieu of, or to the detriment 
of'' may establish an unclear standard and be more restrictive than the 
current language in Q&A Sec.  ----.12(h)-6. Thus, in response to 
comments, the Agencies are not adopting that proposed standard. In 
addition, the Agencies are not adopting the proposed statement that 
``[w]hen evaluating whether community development activities are being 
conducted in lieu of, or to the detriment of, activities in the 
institution's assessment area(s), examiners will consider an 
institution's performance context, including the community development 
needs and opportunities in its assessment area(s), its business 
capacity and focus, and its past performance.''
    Instead, the Agencies are clarifying that a financial institution 
should be ``responsive to community development needs and opportunities 
in its assessment area(s).'' Specifically, Q&A Sec.  ----.12(h)-6 
states, with respect to community development activities that are 
conducted in the broader statewide or regional area that includes the 
institution's assessment area(s), that ``examiners will consider these 
activities even if they will not benefit the institution's assessment 
area(s), as long as the institution has been responsive to community 
development needs and opportunities in its assessment area(s).'' The 
Agencies believe this revision makes clear the importance of being 
responsive to community development needs, a concept reflected 
throughout the CRA regulations.\4\ The Agencies further believe this 
approach provides a flexible standard for determining how financial 
institutions will receive consideration for community development 
activities in the broader statewide or regional area that includes the 
institution's assessment area(s), but that will not directly benefit 
their assessment area(s).
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    \4\ See 12 CFR ----.23, ----.24, ----.25, ----.26, and ----.27, 
as well as Appendix A, which describes ratings.
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    Q&A Sec.  ----.12(h)-6 no longer expressly references an 
institution's performance context or the factors considered as part of 
an institution's performance context, such as community development 
needs and opportunities, the institution's business capacity and focus, 
and its past performance. The Agencies reiterate that the context in 
which an institution's CRA performance occurs is important. Performance 
context is always considered when evaluating an institution's record of 
helping to meet credit needs under CRA.\5\ The needs and opportunities 
of an assessment area may vary depending on the area and the financial 
institution. It is important, therefore, for an institution to be aware 
of the community development needs and opportunities in its assessment 
area(s) and to determine whether, and to what extent, the institution 
has the capacity and expertise to address such needs and opportunities.
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    \5\ 12 CFR ----.21(b).
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    The Agencies proposed to clarify Q&A Sec.  ----.12(h)-7, which 
addresses what is meant by a ``regional area,'' by modifying the 
current description of the term ``regional area'' to provide greater 
clarity about what constitutes a regional area. Proposed Q&A Sec.  --
--.12(h)-7 stated that ``a `regional area' may be an intrastate area or 
a multistate area that includes the financial institution's assessment 
area(s). Regional areas typically have some geographic, demographic, 
and/or economic interdependencies and may conform to commonly accepted 
delineations, such as `the tri-county area' or the `mid-Atlantic 
states.' Regions are often defined by the geographic scope and specific 
purpose of a community development organization or initiative.''
    The Agencies also proposed to remove the discussion in the existing 
answer about how, with larger regional areas, benefit to an 
institution's assessment area(s) may be diffused and, thus, less 
responsive to assessment area needs. The Agencies proposed this 
deletion because this portion of Q&A Sec.  --.12(h)-7 was often 
misinterpreted and would no longer be necessary in light of revised Q&A 
Sec.  --.12(h)-6.
    With regard to proposed Q&A Sec.  --.12(h)-7, most of the 16 
commenters that addressed the proposed Q&A stated that the proposed 
definition of ``regional area'' was sufficiently clear and 
appropriately flexible. Several commenters suggested that Q&A Sec.  
--.12(h)-7 be further revised to specifically state that the 
illustrative geographic alternatives provided in the text of Q&A Sec.  
--.12(h)-7 do not represent a definitive list so as to avoid the 
misinterpretation that the listed alternatives are the only allowable 
options. In addition, three commenters suggested adding ``Indian 
reservation'' or ``Indian area'' as an example of a regional area. 
Commenters also generally supported removing the portion of the Q&A 
that discussed the potential for a diffused potential benefit to an 
institution's assessment area(s). A number of commenters asserted that 
financial institutions needed more certainty that community development 
activities in the broader statewide or regional area that includes an 
institution's assessment area(s) will receive consideration and 
believed that removal of that language may help to clarify that 
institutions will, in fact, receive such consideration.
    The Agencies are adopting Q&A Sec.  --.12(h)-7 as proposed. The 
Agencies

[[Page 69674]]

note that the two examples, ``the tri-county area'' or ``mid-Atlantic 
states,'' provided in the Q&A are not intended to be an exhaustive list 
of examples of regional areas or to otherwise serve as a limitation. 
The intent of the revised Q&A is to provide greater flexibility, and 
the Agencies believe the language ``such as'' is sufficiently clear in 
conveying that the examples provided of regional areas are 
illustrative. The Agencies also note that a broader statewide or 
regional area that includes an Indian reservation or Indian country and 
a financial institution's assessment area(s) would enable the 
institution to receive consideration for community development 
activities in which it engages in the Indian reservation or Indian 
area. Thus, the Agencies do not believe it is necessary to add further 
examples, such as ``Indian reservation'' or ``Indian area.''

II. Investments in Nationwide Funds

    In 2009, the Agencies adopted Q&A Sec.  --.23(a)-2 to address 
investments in nationwide funds. See 12 CFR --.23(a); 74 FR 498 (Jan. 
6, 2009) (2009 Q&A). The Agencies noted that the investment test, at 12 
CFR --.23(a), evaluates an institution's record of helping to meet the 
credit needs of its assessment area(s) through qualified investments 
that benefit an institution's assessment area(s) or a broader statewide 
or regional area that includes the institution's assessment area(s). 
See 74 FR at 501. The Agencies further noted that investments in 
nationwide funds are subject to that standard. The 2009 Q&A advised 
that an institution may provide documentation from a nationwide fund to 
demonstrate the geographic benefit to its assessment area(s) or the 
broader statewide or regional area that includes its assessment 
area(s). Although the 2009 Q&A suggested types of documentation that 
could be provided, it also explained that the Agencies would accept any 
information provided by an institution that reasonably demonstrates 
that the purpose, mandate, or function of a nationwide fund includes 
serving geographies or individuals located within the institution's 
assessment area(s) or a broader statewide or regional area that 
includes its assessment area(s). The 2009 Q&A also stated that, at an 
institution's option, it could provide information that a fund has 
explicitly earmarked its projects or investments to certain investors.
    The Agencies proposed to revise Q&A Sec.  --.23(a)-2 to address 
concerns that side letters and earmarking of projects is burdensome on 
institutions and funds and have seemingly become mandatory. The 
proposed revised Q&A no longer expressly included the option for 
institutions to provide written documentation from the fund 
demonstrating earmarking, side letters, or pro-rata allocations.
    Proposed revised Q&A Sec.  --.23(a)-2 continued to recognize that 
nationwide funds are important sources of investments in low- and 
moderate-income and underserved communities throughout the country and 
can be an efficient vehicle for institutions in making qualified 
investments that help meet community development needs. In doing so, 
the proposed revised Q&A stressed that investments in nationwide funds 
may be suitable investment opportunities, particularly for large 
financial institutions with a nationwide branch footprint or for other 
financial institutions with a nationwide business focus, including 
wholesale or limited purpose institutions. Large institutions with a 
nationwide branch footprint typically have many assessment areas in 
many states; thus, investments in nationwide funds are likely to 
benefit such an institution's assessment area(s), or the broader 
statewide or regional area that includes its assessment area(s), and 
provide that institution with the opportunity to match its investments 
with the geographic scope of its business.
    Further, the proposed revised Q&A stated that other financial 
institutions may find such funds to be efficient investment vehicles to 
help meet community development needs in their assessment area(s) or 
the broader statewide or regional area that includes their assessment 
area(s). The proposed revised Q&A further noted that these other 
institutions, in particular, should consider reviewing the fund's 
investment record to see if it is generally consistent with the 
institution's investment goals and the geographic considerations in the 
regulations.
    Finally, the proposed revised Q&A advised that any ``investments in 
nationwide funds must be performed in a safe and sound manner, 
consistent with an institution's capacity to oversee those activities, 
and may not be conducted in lieu of, or to the detriment of, activities 
in the institution's assessment area(s). When evaluating whether 
community development activities are being conducted in lieu of, or to 
the detriment of, activities in the institution's assessment area(s), 
examiners will consider an institution's performance context, including 
the community development needs and opportunities in its assessment 
area(s), its business capacity and focus, and its past performance.'' 
Thus, the proposed revised Q&A signaled that the performance context of 
a particular institution is very important when determining whether 
investments in nationwide funds are appropriate.
    The Agencies received approximately 53 comments addressing these 
proposed revisions. Commenters were generally supportive of the 
Agencies' intent to clarify when banks would receive CRA consideration 
for investment in nationwide funds. The Agencies are adopting proposed 
revised Q&A Sec.  --.23(a)-2 with several revisions.
    Similar to the comments received on proposed revised Q&A Sec.  
--.12(h)-6, many commenters suggested that the proposed language ``in 
lieu of, or to the detriment of'' in Q&A Sec.  --.23(a)-2 could 
exacerbate the confusion over whether institutions would receive CRA 
consideration for investments in nationwide funds. These commenters 
questioned whether its inclusion would actually enhance the ability of 
institutions to deliver products on a nationwide basis to address 
community needs. Commenters repeated many of the same concerns 
expressed with regard to proposed revised Q&A Sec.  --.12(h)-6, and 
urged the Agencies not to adopt the phrase ``in lieu of, or to the 
detriment of,'' or any reference to ``safety and soundness'' and 
``ability to oversee.'' Consistent with the revisions in final Q&A 
Sec.  --.12(h)-6, the Agencies are not adopting the proposed language 
in Q&A Sec.  --.23(a)-2 stating that ``community development activities 
must be performed in a safe and sound manner consistent with the 
institution's capacity to oversee those activities and may not be 
conducted in lieu of, or to the detriment of, activities in the 
institution's assessment area(s)'' and are eliminating the reference to 
performance context. As explained above in the discussion of final Q&A 
Sec.  --.12(h)-6, CRA-related activities must always be consistent with 
the safe and sound operation of the institution and the Agencies always 
consider performance context when evaluating an institution's 
performance. The Agencies will consider investments in nationwide funds 
that benefit an institution's assessment area(s). Further, examiners 
will consider investments in nationwide funds that benefit the broader 
statewide or regional area that includes the institution's assessment 
area(s) consistent with the treatment detailed in Q&A Sec.  --.12(h)-6.
    Commenters generally agreed that earmarking and side letters may be 
burdensome and provided examples of costly accounting and documentation 
expenses to demonstrate such burden. At the same time, some commenters

[[Page 69675]]

stated concerns that the eliminated reference to optional side letters 
and earmarking could be interpreted as no longer permitting such 
documentation. These commenters asserted that such an interpretation 
could create a greater obstacle to making these investments and urged 
the Agencies to allow institutions to retain the option to earmark 
funds for specific assessment areas and submit documentation, such as 
side letters, during a CRA evaluation. The final Q&A Sec.  --.23(a)-2 
does not contain language regarding written documentation about 
earmarking and side letters. Nevertheless, the Agencies do not intend 
the absence of such language to mean that side letters and earmarking 
are no longer permissible, but a side letter or earmarking 
documentation is not required in order to obtain CRA consideration.
    Commenters also generally expressed support for nationwide funds as 
important sources for investments in low- and moderate-income and 
underserved communities. A few commenters, however, were not in favor 
of encouraging nationwide fund investments that may not benefit the 
institution's assessment area(s). These commenters expressed concern 
that investments in nationwide funds could divert an institution's 
attention away from the needs within a financial institution's 
assessment area(s) (i.e., their local communities). The Agencies 
continue to believe that investments in nationwide funds are important 
sources of investments in low- and moderate-income and underserved 
communities throughout the country and can be an efficient vehicle for 
institutions to make qualified investments that help meet community 
development needs. Accordingly, the Agencies are adopting this 
language, as proposed, in Q&A Sec.  --.23(a)-2. In response to 
comments, however, the Agencies emphasize that an institution's 
performance within its assessment area(s) will remain the primary focus 
of CRA examinations and that investments in nationwide funds should not 
substitute for direct investments in important local community 
development initiatives.
    The Agencies specifically requested comment on when nationwide 
funds would be appropriate investments for regional or smaller 
institutions. A few commenters suggested that nationwide investments 
are never appropriate for small or regional institutions. In contrast, 
other commenters supporting nationwide fund investments noted that 
investments in such funds are appropriate under a number of 
circumstances, including when there is no Community Development 
Financial Institution (CDFI) presence in an area or when the 
institution can demonstrate that the fund has a history of activity in 
its market and the intention to address geographies or individuals 
located within its assessment area(s). One commenter noted that 
nationwide funds provide distinct advantages to all institutions, 
regardless of size, because the large footprint of these funds protects 
investors against risk associated with over-concentration of investment 
in a particular market. The Agencies are adopting the language in Q&A 
Sec.  --.23(a)-2 that addresses regional or smaller institutions' 
investments in nationwide funds. The final Q&A continues to stress 
that, prior to investing in a nationwide fund, institutions should 
review the fund's investment record to determine if it is generally 
consistent with the institution's investment goals and the geographic 
focus in the CRA regulations.
    The Agencies had also proposed language stating that nationwide 
funds may be suitable investments opportunities, particularly for large 
institutions with a nationwide branch footprint or for other financial 
institutions with a nationwide business focus, including wholesale and 
limited purpose institutions. Financial institutions with a nationwide 
branch footprint, for example, typically have assessment areas in many 
states and, thus, investments in nationwide funds are likely to benefit 
such an institution's assessment areas or the broader statewide or 
regional area that includes its assessment areas.
    In the final Q&A, the Agencies have removed the reference to 
``wholesale or limited purpose institutions'' because it is redundant. 
The Agencies have also moved the reference to financial institutions 
with a nationwide business focus from this sentence. Financial 
institutions with a nationwide business focus are now specifically 
addressed in the same context as other financial institutions that do 
not have a nationwide branch footprint. Like other financial 
institutions, if a financial institution with a nationwide business 
focus does not have a nationwide branch footprint, it needs to consider 
the geographic benefit requirements in the CRA regulations. However, 
investments in nationwide funds may still be suitable investments for 
such institutions. Consistent with the treatment detailed in Q&A Sec.  
--.12(h)-6, nationwide funds may provide these institutions with 
additional opportunities to serve the broader statewide or regional 
areas that include their assessment area(s).
    Last, the Agencies requested comment about how investments in 
nationwide funds should be considered in an investing institution's CRA 
evaluation. In response to this question, commenters provided a number 
of recommendations related to whether there should be a special 
category for investment in nationwide funds; how to attribute 
investment in nationwide funds to particular states or assessment 
areas; and how to eliminate the risk of double counting investments in 
funds by financial institutions. With respect to whether investments in 
nationwide funds should be considered separately from other qualified 
investments, commenters were divided. Most commenters opposed the 
creation of a separate category because doing so would further 
complicate CRA evaluations. A few favored the idea, however, and one 
recommended that the Agencies create a distinct ``national needs'' 
category in order to provide an incentive for financial institutions to 
make credit available in underserved areas. The Agencies have 
considered these comments and have decided not to create a separate 
category for investments in nationwide funds to allow financial 
institutions to use nationwide funds to provide for community 
development that reflects their particular business models and 
community development strategies.
    Few commenters addressed how to attribute funds to an institution's 
various assessment areas, but those that did comment suggested that 
consideration for investments in nationwide funds should be treated 
similarly to investments in regional funds. That is, the fund's 
prospectus should be used to determine the areas that benefit from the 
investment. Similarly, few commenters offered suggestions as to how 
regulators should avoid double counting when considering nationwide 
investments. Those that did comment expressed little concern about 
double counting as long as the full dollar amount of the investment, 
and no more, is taken into consideration. The Agencies' examination 
procedures are being revised to clarify how investments in nationwide 
funds will be considered. The examination procedures would allow 
institutions to demonstrate whether such investments have an impact on 
one or more assessment areas. They will also make it clear when such 
investments will be considered at the assessment area, state, or 
institution level to avoid double counting.

[[Page 69676]]

III. Community Services Targeted to Low- or Moderate-Income Individuals

    Existing Q&A Sec.  --.12(g)(2)-1 provided guidance on ways that 
financial institutions may determine that community services are being 
provided to low- or moderate-income individuals. The Agencies proposed 
to add the following examples of situations in which institutions would 
be deemed to provide community services to low- or moderate-income 
people: (1) To students or their families from a school at which the 
majority of students qualify for free or reduced-price meals, and (2) 
to individuals who receive or are eligible to receive Medicaid.
    Several community group and banking organization commenters 
expressed support for the proposed examples. In addition, some 
commenters suggested that the Agencies add additional proxies as 
indicators of serving low- or moderate-income individuals. Common 
suggestions included individuals qualifying for assistance under U.S. 
Department of Housing and Urban Development's section 8, 202, 515, and 
811 programs or the U.S. Department of Agriculture's Supplemental 
Nutrition Assistance Program.
    The Agencies are finalizing Q&A Sec.  --.12(g)(2)-1 with one 
revision. Revised Q&A Sec.  --.12(g)(2)-1 includes the free and 
reduced-priced meals and Medicaid proxies for determining whether 
individuals are low- or moderate-income as proposed. In response to 
comments, the final Q&A also provides that institutions may determine 
that community services are targeted to low- or moderate-income persons 
if the community service is provided to recipients of government 
assistance programs that have income qualifications equivalent to, or 
stricter than, the definitions of low- and moderate-income defined by 
the CRA regulations. Examples include U.S. Department of Housing and 
Urban Development's section 8, 202, 515, and 811 programs and U.S. 
Department of Agriculture's section 514, 516, and Supplemental 
Nutrition Assistance programs.

IV. Service on the Board of Directors of an Organization Engaged in 
Community Development Activities

    Existing Q&A Sec.  --.12(i)-3 stated that providing technical 
assistance to organizations that engage in community development 
activities (as defined by the regulation) is considered a community 
development service. The Agencies proposed to modify Q&A Sec.  
--.12(i)-3 to clarify that service on the board of directors of a 
community development organization is an explicit example of a 
technical assistance activity that could be provided to community 
development organizations that would receive consideration as a 
community development service.
    Most commenters supported the proposed revision. A few commenters 
raised concerns that mere attendance at a board of directors meeting 
was not sufficient to merit CRA consideration. These commenters wanted 
to ensure that CRA consideration would be provided only in recognition 
of active participation.
    In addition, several commenters suggested expanding the list of 
technical assistance activities to include other professional skills 
offered by institution personnel, such as information technology 
support, legal assistance, and human resources, because these technical 
assistance activities are crucial to the provision of financial 
services by community development organizations.
    The Agencies are adopting the revision to Q&A Sec.  --.12(i)-3 
addressing service on the board of directors of a community development 
organization as proposed. Although the Q&A does not expressly address 
commenters' concerns that financial institutions' representatives 
actively participate when serving on community development 
organizations' boards of directors, the Agencies note that all 
community development services are expected to provide genuine benefit 
to financial institutions' communities for consideration in a CRA 
evaluation. Further, the Agencies consider the responsiveness of 
community development services. Consideration of the qualitative 
aspects of performance recognizes that community development activities 
sometimes require special expertise or effort on the part of the 
institution or provide a benefit to the community that would not 
otherwise be made available.
    In addition, in response to commenters' suggestions, the Agencies 
are adding the following example of a technical assistance activity 
that might be provided to community development organizations: 
providing services reflecting financial institution employees' areas of 
expertise at the institution, such as human resources, information 
technology, and legal services.

New Questions and Answers

I. Qualified Investments

    The Agencies proposed a new Q&A Sec.  --.12(t)-9 to address the 
quantitative consideration that should be provided for a particular 
type of investment or loan so that the amount of consideration is 
consistent with the amount of support provided to the activity or 
entity with a community development purpose. The Agencies became aware 
of situations in which a financial institution invests in, or lends to, 
an organization and then the organization invests the funds in an 
instrument, such as a Treasury security, which does not have a 
community development purpose. In these cases, the organization uses 
only the income (or a portion thereof) from the investment to support 
its community development purpose. At the end of the investment or loan 
term, the institution's investment or loan amount and, in some cases, a 
portion of the income from the instrument are returned to the 
institution. Although the financial institution has invested or loaned 
a comparatively large amount to the organization, only the much smaller 
amount of income from the organization's investment is used to support 
the organization's community development purpose.
    The Agencies believe it is inappropriate to consider the entire 
amount of such investments or loans as qualified investments or 
community development loans, particularly when compared to investments 
or loans to other organizations that use the entire loan or invested 
amount to support their community development purpose. Accordingly, the 
Agencies proposed a new Q&A Sec.  --.12(t)-9 to provide guidance about 
the amount of quantitative consideration that should be allowed for 
these types of investments or loans.
    The majority of commenters addressing Q&A Sec.  --.12(t)-9 were 
supportive of the Agencies' intent to clarify the treatment of 
qualified investments that involve funds that are not invested in 
instruments related to community development. However, some commenters 
were concerned that the proposed Q&A would result in less consideration 
for qualified investments. Several commenters were concerned that the 
proposed Q&A could negatively affect community development 
organizations' liquidity and harm the ability of CDFIs or other 
investment funds to operate in a safe and sound manner. These 
commenters suggested revisions that would make clear that the treatment 
described in the Q&A would not apply to investments in or loans to 
CDFIs or other organizations with a primary purpose of community 
development. A number of commenters believed that, absent changes, the 
proposed guidance would have a negative impact on institutions'

[[Page 69677]]

investments in community development activities.
    In addition, many of the commenters who addressed the proposed Q&A 
suggested that the proposed Q&A should not apply when funds are not 
immediately deployed toward community development activities, but 
temporarily invested in non-community development instruments until the 
funds can be used for their intended community development purpose. 
Commenters asserted that financial institutions should not be penalized 
for investments that are temporarily placed in safe instruments for a 
period until the community development organization is able to use the 
funds for their intended purpose.
    In response to comments, the Agencies are adopting Q&A Sec.  
--.12(t)-9 with additional clarification. The final Q&A states that 
examiners will provide consideration for investments or loans when the 
community development organization invests the funds in instruments 
without a community development purpose solely as a means of securing 
capital for leveraging purposes, securing additional financing, or in 
order to generate a return with minimal risk until funds can be 
deployed toward the originally intended community development activity. 
The organization must express a bona fide intent to deploy the funds 
from investments and loans in a manner that primarily serves a 
community development purpose in order for the institution to receive 
consideration under the applicable test.

II. Community Development Lending in the Lending Test Applicable to 
Large Institutions

    The Agencies proposed new Q&A Sec.  --.22(b)(4)-2 to clarify that 
community development lending performance is always a factor that is 
considered in an institution's lending test rating. Proposed new Q&A 
Sec.  --.22(b)(4)-2 addressed the concern that insufficient weight was 
given to community development loans in CRA evaluations. The proposed 
Q&A was also intended to promote consistent treatment of community 
development lending among the Agencies.
    The proposed new Q&A clarified that an institution's record of 
making community development loans may have a positive, neutral, or 
negative impact on an institution's lending test rating. The Agencies 
consider an institution's community development lending performance in 
the context of the institution's business model, the needs of its 
community, and the availability of community development opportunities 
in its assessment area(s) or the broader statewide or regional area(s) 
that includes the assessment area(s) (i.e., the institution's 
performance context). Further, strong performance in retail lending may 
compensate for weak performance in community development lending and, 
conversely, strong community development lending may compensate for 
weak retail lending performance.
    Some financial industry commenters viewed the proposed Q&A as a 
mandate to undertake community development lending in all assessment 
areas. Most financial industry commenters raised concerns regarding how 
bankers and examiners will determine ``how much is enough'' community 
development lending, particularly in light of the complexity involved 
in evaluating community development activities within an institution's 
performance context. Several community organization commenters opposed 
the language indicating that strong performance in community 
development lending may offset weak performance in retail lending and, 
conversely, strong performance in retail lending may offset weak 
performance in community development lending.
    The Agencies are adopting Q&A Sec.  --.22(b)(4)-2 as proposed. The 
Agencies emphasize that the Q&A does not mandate that a financial 
institution must engage in community development lending in every 
assessment area. Examiners will consider the absence or lack of 
community development lending in a particular assessment area within 
the context of the environment in which the institution operated during 
the evaluation period, including economic, demographic, and competitive 
factors, the institution's financial capacity or constraints, and 
community needs and opportunities to make community development loans 
in the institution's assessment area(s). The Agencies also note that 
the language in the Q&A, which indicates that strong performance in 
community development lending may offset weak performance in retail 
lending and, conversely, strong performance in retail lending may 
offset weak performance in community development lending, repeats 
regulatory language found at Appendix A to Part ----Ratings and is 
further explained in Q&A Appendix A to Part ---1.

Redesignation of Existing Question and Answer Without Substantive 
Change

Activities With Minority- and Women-Owned Financial Institutions and 
Low-Income Credit Unions

    In 2009, the Agencies adopted Q&A Sec.  --.12(g)-4 to address CRA 
consideration of majority-owned institutions' activities with minority- 
and women-owned financial institutions and low-income credit unions 
(MWLI). See 74 FR 498 (Jan. 6, 2009). In 2010, the Agencies revised 
their regulations to implement section 804(b) of the CRA, which 
addresses the same topic. See 12 CFR --.21(f); 75 FR 61035 (Oct. 4, 
2010). As a result, the Agencies proposed to redesignate existing Q&A 
Sec.  --.12(g)-4 as Q&A Sec.  --.21(f)-1 so that the Q&A would 
correlate to the appropriate regulatory provision that addresses the 
same topic. The Agencies did not propose any substantive changes to the 
existing Q&A.
    Several community group and nonprofit organization commenters urged 
the Agencies to provide the same geographically beneficial treatment 
for CDFIs as is provided to MWLIs. The CRA statute provides that 
activities undertaken with MWLIs need not benefit the majority-owned 
financial institution's assessment area(s); but must help meet the 
credit needs of the local communities in which the MWLI is chartered. 
Because the CRA statute does not extend this special status to CDFIs, 
the Agencies do not believe it is appropriate to extend the special 
status granted to MWLIs to CDFIs or other community development 
entities through guidance.
    Accordingly, the Agencies are adopting redesignated Q&A Sec.  
--.21(f)-1 as proposed.
    The text of the final new, revised, and redesignated Interagency 
Questions and Answers follows:
* * * * *
    Sec.  --.12(g)(2)-1: Community development includes community 
services targeted to low- or moderate-income individuals. What are 
examples of ways that an institution could determine that community 
services are offered to low- or moderate-income individuals?
    A1. Examples of ways in which an institution could determine that 
community services are targeted to low- or moderate-income persons 
include, but are not limited to:
     The community service is targeted to the clients of a 
nonprofit organization that has a defined mission of serving low- and 
moderate-income persons, or, because of government grants, for

[[Page 69678]]

example, is limited to offering services only to low- or moderate-
income persons.
     The community service is offered by a nonprofit 
organization that is located in and serves a low- or moderate-income 
geography.
     The community service is conducted in a low- or moderate-
income area and targeted to the residents of the area.
     The community service is a clearly defined program that 
benefits primarily low- or moderate-income persons, even if it is 
provided by an entity that offers other programs that serve individuals 
of all income levels.
     The community service is offered at a workplace to workers 
who are low- and moderate-income, based on readily available data for 
the average wage for workers in that particular occupation or industry 
(see, e.g., http://www.bls.gov/bls/blswage.htm (Bureau of Labor 
Statistics)).
     The community service is provided to students or their 
families from a school at which the majority of students qualify for 
free or reduced-price meals under the U.S. Department of Agriculture's 
National School Lunch Program.
     The community service is targeted to individuals who 
receive or are eligible to receive Medicaid.
     The community service is provided to recipients of 
government assistance programs that have income qualifications 
equivalent to, or stricter than, the definitions of low- and moderate-
income as defined by the CRA Regulations. Examples include U.S. 
Department of Housing and Urban Development's section 8, 202, 515, and 
811 programs or U.S. Department of Agriculture's section 514, 516, and 
Supplemental Nutrition Assistance programs.
* * * * *
    Sec.  --.12(h)-6: Must there be some immediate or direct benefit to 
the institution's assessment area(s) to satisfy the regulations' 
requirement that qualified investments and community development loans 
or services benefit an institution's assessment area(s) or a broader 
statewide or regional area that includes the institution's assessment 
area(s)?
    A6. No. The regulations recognize that community development 
organizations and programs are efficient and effective ways for 
institutions to promote community development. These organizations and 
programs often operate on a statewide or even multistate basis. 
Therefore, an institution's activity is considered a community 
development loan or service or a qualified investment if it supports an 
organization or activity that covers an area that is larger than, but 
includes, the institution's assessment area(s). The institution's 
assessment area(s) need not receive an immediate or direct benefit from 
the institution's participation in the organization or activity, 
provided that the purpose, mandate, or function of the organization or 
activity includes serving geographies or individuals located within the 
institution's assessment area(s).
    In addition, a retail institution will receive consideration for 
certain other community development activities. These activities must 
benefit geographies or individuals located somewhere within a broader 
statewide or regional area that includes the institution's assessment 
area(s). Examiners will consider these activities even if they will not 
benefit the institution's assessment area(s), as long as the 
institution has been responsive to community development needs and 
opportunities in its assessment area(s).
    Sec.  --.12(h)-7: What is meant by the term ``regional area''?
    A7. A ``regional area'' may be an intrastate area or a multistate 
area that includes the financial institution's assessment area(s). 
Regional areas typically have some geographic, demographic, and/or 
economic interdependencies and may conform to commonly accepted 
delineations, such as ``the tri-county area'' or the ``mid-Atlantic 
states.'' Regions are often defined by the geographic scope and 
specific purpose of a community development organization or initiative.
* * * * *
    Sec.  --.12(i)-3: What are examples of community development 
services?
    A3. Examples of community development services include, but are not 
limited to, the following:
     Providing financial services to low- and moderate-income 
individuals through branches and other facilities located in low- and 
moderate-income areas, unless the provision of such services has been 
considered in the evaluation of an institution's retail banking 
services under 12 CFR --.24(d);
     Increasing access to financial services by opening or 
maintaining branches or other facilities that help to revitalize or 
stabilize a low- or moderate-income geography, a designated disaster 
area, or a distressed or underserved nonmetropolitan middle-income 
geography, unless the opening or maintaining of such branches or other 
facilities has been considered in the evaluation of the institution's 
retail banking services under 12 CFR --.24(d);
     Providing technical assistance on financial matters to 
nonprofit, tribal, or government organizations serving low- and 
moderate-income housing or economic revitalization and development 
needs;
     Providing technical assistance on financial matters to 
small businesses or community development organizations, including 
organizations and individuals who apply for loans or grants under the 
Federal Home Loan Banks' Affordable Housing Program;
     Lending employees to provide financial services for 
organizations facilitating affordable housing construction and 
rehabilitation or development of affordable housing;
     Providing credit counseling, home-buyer and home-
maintenance counseling, financial planning, or other financial services 
education to promote community development and affordable housing, 
including credit counseling to assist low- or moderate-income borrowers 
in avoiding foreclosure on their homes;
     Establishing school savings programs or developing or 
teaching financial education or literacy curricula for low- or 
moderate-income individuals;
     Providing electronic benefits transfer and point of sale 
terminal systems to improve access to financial services, such as by 
decreasing costs, for low- or moderate-income individuals;
     Providing international remittance services that increase 
access to financial services by low- and moderate-income persons (for 
example, by offering reasonably priced international remittance 
services in connection with a low-cost account);
     Providing other financial services with the primary 
purpose of community development, such as low-cost savings or checking 
accounts, including ``Electronic Transfer Accounts'' provided pursuant 
to the Debt Collection Improvement Act of 1996, individual development 
accounts (IDAs), or free or low-cost government, payroll, or other 
check cashing services, that increase access to financial services for 
low- or moderate-income individuals; and
     Providing foreclosure prevention programs to low- or 
moderate-income homeowners who are facing foreclosure on their primary 
residence with the objective of providing affordable, sustainable, 
long-term loan modifications and restructurings.
    Examples of technical assistance activities that are related to the 
provision of financial services and that

[[Page 69679]]

might be provided to community development organizations include:
     Serving on the board of directors;
     Serving on a loan review committee;
     Developing loan application and underwriting standards;
     Developing loan-processing systems;
     Developing secondary market vehicles or programs;
     Assisting in marketing financial services, including 
development of advertising and promotions, publications, workshops and 
conferences;
     Furnishing financial services training for staff and 
management;
     Contributing accounting/bookkeeping services;
     Assisting in fund raising, including soliciting or 
arranging investments; and
     Providing services reflecting financial institution 
employees' areas of expertise at the institution, such as human 
resources, information technology, and legal services.
* * * * *
    Sec.  --.12(t)-9: How do examiners evaluate loans or investments to 
organizations that, in turn, invest in instruments 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 of funds that benefit an organization or activity that has a 
primary purpose of community development. If an institution invests in 
(or lends to) an organization that, in turn, invests those funds in 
instruments that do not have as their primary purpose community 
development, such as Treasury securities, and uses only the income, or 
a portion of the income, from those investments to support the 
organization's community development purposes, the Agencies will 
consider only the amount of the investment income used to benefit the 
organization or activity that has a community development purpose for 
CRA purposes. Examiners will, however, provide consideration for such 
instruments when the organization invests solely as a means of securing 
capital for leveraging purposes, securing additional financing, or in 
order to generate a return with minimal risk until funds can be 
deployed toward the originally intended community development activity. 
The organization must express a bona fide intent to deploy the funds 
from investments and loans in a manner that primarily serves a 
community development purpose in order for the institution to receive 
consideration under the applicable test.
* * * * *
    Sec.  --.21(f)-1: The CRA provides that, in assessing the CRA 
performance of nonminority- and non-women-owned (majority-owned) 
financial institutions, examiners may consider as a factor capital 
investments, loan participations, and other ventures undertaken by the 
institutions in cooperation with minority- or women-owned financial 
institutions and low-income credit unions (MWLIs), provided that these 
activities help meet the credit needs of local communities in which the 
MWLIs are chartered. Must such activities also benefit the majority-
owned financial institution's assessment area(s)?
    A1. No. Although the regulations generally provide that an 
institution's CRA activities will be evaluated for the extent to which 
they benefit the institution's assessment area(s) or a broader 
statewide or regional area that includes the institution's assessment 
area(s), the Agencies apply a broader geographic criterion when 
evaluating capital investments, loan participations, and other ventures 
undertaken by that institution in cooperation with MWLIs, as provided 
by the CRA. Thus, such activities will be favorably considered in the 
CRA performance evaluation of the institution (as loans, investments, 
or services, as appropriate), even if the MWLIs are not located in, or 
such activities do not benefit, the assessment area(s) of the majority-
owned institution or the broader statewide or regional area that 
includes its assessment area(s). The activities must, however, help 
meet the credit needs of the local communities in which the MWLIs are 
chartered. The impact of a majority-owned institution's activities in 
cooperation with MWLIs on the majority-owned institution's CRA rating 
will be determined in conjunction with its overall performance in its 
assessment area(s).
    Examples of activities undertaken by a majority-owned financial 
institution in cooperation with MWLIs that would receive CRA 
consideration may include:
     Making a deposit or capital investment;
     Purchasing a participation in a loan;
     Loaning an officer or providing other technical expertise 
to assist an MWLI in improving its lending policies and practices;
     Providing financial support to enable an MWLI to partner 
with schools or universities to offer financial literacy education to 
members of its local community; or
     Providing free or discounted data processing systems, or 
office facilities to aid an MWLI in serving its customers.
* * * * *
    Sec.  --.22(b)(4)-2: How do examiners consider community 
development loans in the evaluation of an institution's record of 
lending under the lending test applicable to large institutions?
    A2. An institution's record of making community development loans 
may have a positive, neutral, or negative impact on the lending test 
rating. Community development lending is one of five performance 
criteria in the lending test criteria and, as such, it is considered at 
every examination. As with all lending test criteria, examiners 
evaluate an institution's record of making community development loans 
in the context of an institution's business model, the needs of its 
community, and the availability of community development opportunities 
in its assessment area(s) or the broader statewide or regional area(s) 
that includes the assessment area(s). For example, in some cases 
community development lending could have either a neutral or negative 
impact when the volume and number of community development loans are 
not adequate, depending on the performance context, while in other 
cases, it would have a positive impact when the institution is a leader 
in community development lending. Additionally, strong performance in 
retail lending may compensate for weak performance in community 
development lending, and conversely, strong community development 
lending may compensate for weak retail lending performance.
* * * * *
    Sec.  --.23(a)-2: In order to receive CRA consideration, what 
information may an institution provide that would demonstrate that an 
investment in a nationwide fund with a primary purpose of community 
development will directly or indirectly benefit one or more of the 
institution's assessment area(s) or a broader statewide or regional 
area that includes the institution's assessment area(s)?
    A2. There may be several ways to demonstrate that the institution's 
investment in a nationwide fund meets the geographic requirements, and 
the Agencies will employ appropriate flexibility in this regard in 
reviewing information the institution provides that reasonably supports 
this determination.
    In making this determination, the Agencies will consider any 
information provided by a financial institution that reasonably 
demonstrates that the purpose, mandate, or function of the

[[Page 69680]]

fund includes serving geographies or individuals located within the 
institution's assessment area(s) or a broader statewide or regional 
area that includes the institution's assessment area(s). Typically, 
information about where a fund's investments are expected to be made or 
targeted will be found in the fund's prospectus, or other documents 
provided by the fund prior to or at the time of the institution's 
investment, and the institution, at its option, may provide such 
documentation in connection with its CRA evaluation.
    Nationwide funds are important sources of investments in low- and 
moderate-income and underserved communities throughout the country and 
can be an efficient vehicle for institutions in making qualified 
investments that help meet community development needs. Nationwide 
funds may be suitable investment opportunities, particularly for large 
financial institutions with a nationwide branch footprint. Other 
financial institutions, including those with a nationwide business 
focus, may find such funds to be efficient investment vehicles to help 
meet community development needs in their assessment area(s) or the 
broader statewide or regional area that includes their assessment 
area(s). Prior to investing in such a fund, an institution should 
consider reviewing the fund's investment record to see if it is 
generally consistent with the institution's investment goals and the 
geographic considerations in the regulations. Examiners will consider 
investments in nationwide funds that benefit the institution's 
assessment area(s). Examiners will also consider investments in 
nationwide funds that benefit the broader statewide or regional area 
that includes the institution's assessment area(s) consistent with the 
treatment detailed in Q&A Sec.  --.12(h)-6.
    End of text of the final new and revised Interagency Questions and 
Answers.

    Dated: November 14, 2013.
Thomas J. Curry,
Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, November 12, 2013.
Robert deV. Frierson,
Secretary of the Board.
    Dated at Washington, DC, this 13th day of November, 2013.

    Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2013-27738 Filed 11-19-13; 8:45 am]
BILLING CODE 6210-01-P; 4810-33-P; 6714-01-P