1. Identify qualified investments by reviewing the institution’s investment portfolio, and at the institution’s option, its affiliate’s investment portfolio. As necessary, obtain a prospectus, or other information that describes the investment(s) and the geographic area(s) or population(s) served. This review should encompass qualified investments, including investments in a broader statewide or regional area and in nationwide funds, that were made since the previous examination (including those that have been sold or have matured) and may consider qualified investments made prior to the previous examination still outstanding. Also, consider qualifying grants, donations, or in-kind contributions of property since the last examination that are for community development purposes. Determine:
a. Whether the investments have been considered under the lending or service tests; and
b. Whether an affiliate’s investments, if considered, have been claimed by another institution.
2. Evaluate investment performance using information obtained in the performance context procedures, especially with regard to community needs and institutional capacity. Determine:
a. The number and amount of qualified investments in:
i. The institution’s assessment area(s); or
ii. The broader statewide or regional area that includes the assessment area(s) that support organizations or activities with a purpose, mandate, or function that includes serving the geographies or individuals located within the institution’s assessment area(s).
Note: A large institution with a nationwide branch footprint typically has many assessment areas in many states. 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.
b. The extent to which qualified investment opportunities have been available to the institution;
c. The institution’s responsiveness to opportunities for qualified investments; d
. The use of any innovative or complex investments, in particular those that are not routinely provided by other investors; and
e. The degree to which investments serve low- and moderate-income areas or individuals, designated disaster areas, or distressed or underserved nonmetropolitan middle-income geographies, and the available opportunities for qualified investments.
3. If the institution has been responsive to community development needs and opportunities in its assessment area(s) based on the analysis in step number 2, consider:
a. The number and dollar amount of qualified investments in the broader statewide or regional area that includes the assessment area(s), but:
i. Will not benefit the assessment area(s); and
ii. Do not support organizations or activities with a purpose, mandate, or function that includes serving geographies or individuals located within the institution’s assessment area(s).
b. The extent to which these investments enhance the institution’s performance.
Note: Refer to the appendix for additional guidance on addressing activities at the state or multistate MSA, or institution level.
4. Discuss with management the preliminary findings in this section.
5. Summarize conclusions about the institution’s investment performance after considering:
a. The number and dollar amount of qualified investments;
b. The innovativeness and complexity of qualified investments;
c. The degree to which these qualified investments are not routinely provided by other private investors; and
d. The responsiveness of qualified investments to available opportunities.
6. Prepare comments for the performance evaluation and the Compliance examination report. Refer to the appendix for guidance on addressing community development activities in the performance evaluation.
SOURCE: Large Institution CRA Examination Procedures | OCC, FRB, and FDIC | April 2014