Alert November 26, 2013

FDIC, FRB and OCC Issue Joint Final Revisions to Interagency Q&As Regarding Community Reinvestment

The OCC, FDIC, and FRB jointly issued final updates to the Interagency Questions and Answers Regarding Community Reinvestment.  The final changes (the “Final Q&As”) focus primarily on issues concerning community development and revise five questions and answers that address: (1) community development activities outside institutions’ respective assessment areas; (2) additional ways to determine whether recipients of community services are low- or moderate-income; and (3) providing a community development service by, for example, serving on the board of directors of a community development organization.  For example, the Final Q&As clarify that community development activities in an institution’s broader statewide or regional area or an investment in a nationwide community development fund that includes the applicable institution’s assessment area will be considered in the evaluation of an institution’s Community Reinvestment Act (“CRA”) performance.  The Final Q&As also add two new questions and answers.  The first new question and answer relates to consideration of community development performance in determining a large financial institution’s lending test rating.  The second new question and answer concerns the quantitative consideration given to loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investment to support a community development purpose.  The Final Q&As became effective November 20, 2013.