Banking and Finance Law Daily OCC bulletin summarizes, clarifies CRA rule requirements
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Tuesday, November 10, 2020

OCC bulletin summarizes, clarifies CRA rule requirements

By Lisa M. Goolik, J.D.

The bulletin addresses frequently asked questions related to the transition period, qualifying activities, bank types, examinations, and the final rule’s notice requirements.

The Office of the Comptroller of the Currency has published a bulletin containing answers to frequently asked questions regarding its Community Reinvestment Act final rule that took effect Oct. 1, 2020. The bulletin summarizes the key provisions and provides responses to questions from bankers and examiners about how the OCC will administer and implement the rule (OCC Bulletin 2020-99).

Highlights of the final rule. Published in the Federal Register on June 5, 2020, the final rule: clarifies and expands the bank lending, investment, and services that qualify for positive CRA consideration; updates how banks delineate the assessment areas in which they are evaluated; provides additional methods for evaluating CRA performance in a consistent and objective manner; and requires reporting that is timely and transparent. The OCC also issued a list of qualifying CRA activities.

The final rule establishes three compliance dates. Banks must comply with certain provisions of the June 2020 rule as of the effective date of Oct. 1, 2020, while other provisions have compliance dates of either Jan. 1, 2023, or Jan. 1, 2024, depending on the bank type. The rule also includes a transition provision to provide flexibility for the OCC to establish an orderly transition for CRA examinations that assess performance based on activities conducted on or after Oct. 1, 2020, but before the applicable compliance date.

The OCC said it is conducting outreach activities to provide banks with more information regarding how the agency will administer the transition to the June 2020 rule, beginning with those provisions in the rule that have an Oct. 1, 2020, compliance date. In the meantime, the OCC has addressed frequently asked questions related to the transition period, qualifying activities, bank types, examinations, and the rule’s notice requirements.

Bank type. The OCC said it will apply the asset size thresholds in the small bank and intermediate bank definitions of the June 2020 rule to determine bank type in December 2020. Bank type based on the December assessment will then be communicated to banks.

  • A bank with assets of $600 million or less is a small bank.
  • A bank with assets greater than $600 million and equal to or less than $2.5 billion is an intermediate bank.
  • A bank with assets greater than $2.5 billion will become a GPS (global performance standards) bank.
  • Wholesale and limited purpose bank type designations and examination procedures do not change.

Examinations. Addressing question related to examinations, the OCC said it plans to issue new examination procedures for all bank types and will publish "a reasonable schedule for implementing the updated procedures during the transition period."

For CRA examinations that evaluate bank activities conducted during the transition period and before the effective date of new guidance or examination procedures, the OCC said the examination procedures under the former, 1995 rule will be used, based on bank type. Specifically:

  • A small bank is subject to the 1995 rule’s small bank examination procedures.
  • An intermediate bank is subject is to the 1995 rule’s intermediate small bank examination procedures.
  • To administer a seamless transition to the June 2020 rule, a GPS bank is subject to the 1995 rule’s large bank examination procedures.
  • Wholesale and limited purpose bank type designations and examination procedures do not change.

Notice requirements. The OCC also clarified that banks may comply with the final rule’s notice requirements on Oct. 1, 2020, or, at their option, continue to display the notice required under the former rule until March 1, 2021. All banks must comply with the June 2020 rule notice requirements by March 1, 2021.

Banks must display the public notice in their main office and branch offices "in a form and location visible and prominent to the public," which includes either paper or an electronic format, such as a digital display. In addition to a display of the public notice in one of these formats, banks may also post the notice on their websites.

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