On December 14, 2021, the U.S. Office of the Comptroller of Currency (“OCC”) adopted a new ‎final ‎rule (“Final Rule”)‎ under the Community Reinvestment Act of 1977, as amended (the ‎‎“CRA”) which ‎will be effective on January 1, 2022, with certain compliance requirements ‎delayed to April 1, 2022. ‎The Final Rule replaces the Community Reinvestment Act rule that ‎was proposed by the Trump ‎Administration June 5, 2020 (the “June 2020 Rule”), which is effective ‎from October 1, 2020 until its ‎replacement by the Final Rule; some of the more material aspects of ‎the June 2020 Rule had ‎delayed compliance dates beginning on January 1, 2023, or January 1, ‎‎2024. Since substantial ‎portions of the June 2020 Rule had not been implemented, the Final ‎Rule, in sum keeps much of the ‎existing CRA rules in force and provides a platform for future ‎rulemaking by the OCC, the Board of ‎Governors of the Federal Reserve System (“Board”), and ‎Federal Deposit Insurance Corporation ‎‎(“FDIC” and, collectively with the OCC and Board, the ‎‎“Banking Agencies”).‎

The primary purpose of CRA is to encourage insured depository institutions (“IDIs”) to help ‎meet the ‎credit needs of the communities in which they are chartered, including low- and ‎moderate-income ‎neighborhoods, consistent with the safe and sound operation of such ‎institutions.‎

The Final Rule is largely a reinstatement of the 1995 CRA rules (“1995 CRA Rules”) that were ‎jointly ‎promulgated by the Banking Agencies. The OCC states in the Final Rule that it is ‎intended to drive ‎cooperation among the Banking Agencies for collaboration to make further ‎CRA refinements and ‎that another benefit of the Final Rule is the reestablishment of uniformity ‎of enforcement of CRA ‎requirements on IDIs among the Banking Agencies. The June 2020 Rule ‎had been unilaterally ‎adopted by the OCC without the concurrence of the Board or FDIC.‎

Importantly, Final Rule generally re-adopts the 1995 CRA Rules definitions of “qualifying ‎activities”. ‎The Banking Agencies believe that this change will promote confidence that (1) IDIs ‎will receive ‎consideration for activities that the Banking Agencies have collectively recognized ‎help to meet ‎community credit needs; (2) consistent rules from each Banking Agency will apply ‎to all IDIs; (3) IDIs ‎will receive credit for dollars that are already legally committed; and (4) the ‎OCC will be able to work ‎more effectively with the Board and the FDIC to determine the types ‎of activities that should receive ‎consideration under any future Banking Agencies’ CRA rules. The Final ‎Rule includes a provision ‎in subpart D that explains when activities will qualify for CRA ‎consideration in CRA examinations ‎based on the rule that was in effect at the time that the activities ‎were conducted.‎

The Final rule offers the following key changes to the rescinded June 2020 Rule.‎

The Final Rule reinstates different performance tests and standards for banks of different sizes, ‎‎structures, and operations. Specifically, the Final Rule provides an assessment method for:‎

• ‎small banks, that emphasizes lending performance. The small bank lending test could ‎also ‎have included consideration of community development (CD) loans. Qualified ‎‎investments and CD services could have been considered at the bank’s option for an ‎‎‎“outstanding” rating, but only if the bank met or exceeded the lending test criteria in the ‎‎small bank performance standards; ‎
• intermediate small banks, that focuses on lending and CD activities (i.e., CD loans, ‎‎investments, and services); ‎
• large retail banks, that focuses on lending, investment, and service performance. Lending ‎‎and service tests would have considered both retail and CD activity, while the large bank ‎‎investment test will focus on qualified investments; and ‎
• wholesale and limited purpose banks, which is based on CD activities. ‎

The Final Rule allows any bank, regardless of its size or business strategy, the option to allow its ‎‎prudential regulator to evaluate it under its strategic plan (see below for updates to strategic plan ‎‎requirements). ‎

The Final Rule also:‎

• ‎requires an IDI’s prudential regulator, when determining the IDIs CRA rating, to ‎consider ‎the IDIs violations of, among other things, the Equal Credit Opportunity Act, ‎Fair Housing ‎Act, Homeownership and Equity Protection Act, the prohibition against ‎unfair or deceptive ‎acts or practices in section 5 of the Federal Trade Commission Act, ‎Section 8 of the Real ‎Estate Settlement Procedures Act, the Truth in Lending Act, credit-‎related violations of the ‎Military Lending Act (MLA), and Servicemembers Civil Relief ‎Act; in each case based on ‎guidance that predates the June 2020 Rule;‎
• allows IDIs to receive consideration for affiliate activities as provided for in the Final ‎Rule, ‎which (1) enables IDIs to retain their existing business models for engaging in CRA ‎‎activities; (2) ensures that IDIs receive consideration for CRA-qualifying activities; and ‎‎(3) ‎promotes continued efforts for IDIs to serve their communities;‎
• allows strategic plans approved under the June 2020 Rule to remain in effect but these ‎‎plans must conform with the provisions of the Final Rule. For instance, the provisions in ‎‎strategic plans that include goals for activities outside a bank’s assessment area(s) will no ‎‎longer be applicable and will no longer be evaluated when assessing the bank’s ‎‎performance;‎
• includes a number of non-substantive or technical changes to proposed part 25 and its ‎‎appendices to reflect the integration of the national bank and savings association rules. ‎‎For example, Section 25.11(c)(1)(iii) of the final rule explains that the phrase ‘‘appropriate ‎‎Federal banking agency’’ will mean the OCC when the institution is a national bank or ‎‎Federal savings association and the FDIC when the institution is a state savings ‎‎association; and
• excludes for consideration any CRA activities that do not directly or indirectly serve ‎either a ‎bank’s assessment area(s) or the broader statewide or regional area(s) that include ‎a ‎bank’s assessment area(s).‎

The Final Rule delays until April 1, 2020, certain new requirements under: ‎

• ‎§25.43, which will require IDIs to maintain a public file containing, among other things, ‎‎(1) ‎all written comments received from the public for the three year period then ended that ‎‎specifically relate to the IDIs performance in helping to meet community credit needs, ‎and ‎any response to the comments; and (2) a copy of the public section of the IDIs most ‎recent ‎CRA Performance Evaluation prepared by its prudential regulator; and
• §25.44, which will require IDIs to display in the public lobby of its main office and each ‎of ‎its branches the appropriate Community Reinvestment Act Notice which, among other ‎‎things, invites community input regarding the IDI’s CRA performance.‎