Intermediate Small Institutions | Community Development Test

An institution should appropriately assess the needs in its community, engage in different types of community development activities based on those needs and the institution’s capacities, and take reasonable steps to apply its community development resources strategically to meet those needs. The flexibility inherent in the community development test allows intermediate small institutions to focus on meeting the substance of community needs through these activities. Examiners will consider the results of any assessment by the institution of community needs along with information from community, government, civic, and other sources to gain a working knowledge of community needs.

1 – Identify the number and amount of the institution’s community development loans, qualified investments, and community development services. Obtain this information through discussions with management, HMDA data collected by the institution, as applicable; investment portfolios; any other relevant financial records; and materials available to the public. Include, at the institution’s option: a. Community development loans, qualified investments, and community development services provided by affiliates, if they are not claimed by any other institution; and b. Community development lending by consortia or third parties.

2 – Review community development loans, qualified investments, and community development services to verify that they qualify as community development.

3 – If the institution participates in community development lending by consortia or third parties, or claims activities provided by affiliates, review records provided to the institution by the consortia or third parties or affiliates to ensure that the community development loans claimed by the institution do not account for more than the institution’s share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.

4 – Considering the institution’s capacity and constraints and other information obtained through the performance context review, form conclusions about:

a – The number and amount of community development loans and qualified investments;

b – The extent to which the institution provides community development services, including the provision and availability of services to low- and moderate-income people, including through branches and other facilities in low- and moderate-income areas.

c – The responsiveness to the opportunities for community development lending, qualified investments, and community development services, considering:

1) The results of any assessment of community development needs and opportunities provided by the institution;

2) The examiner’s review of performance context information from community, government, civic, and other sources; and

3) Whether the amount and combination of community development loans, qualified investments, and community development services, along with their qualitative aspects, are responsive to community needs and opportunities.

5 – Summarize conclusions regarding the institution’s community development performance and retain in the work papers.

 

SOURCE:  Intermediate Small Institution CRA Examination Procedures | OCC, FRB, FDIC, and OTS | July 2007

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