InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
OCC releases September CRA Evaluations
On October 1, the OCC released its CRA performance evaluations for September. The OCC evaluated 21 entities, including national banks, federal savings associations and insured federal branches of foreign banks. The assessment framework has four ratings: Outstanding, Satisfactory, Needs to Improve and Substantial Noncompliance. Of the 21 evaluations reported by the OCC, 16 entities were rated “Satisfactory,” five entities were rated “Outstanding,” and none were rated either “Needs to Improve” or “Substantial Noncompliance.”
OCC releases final rule on the Bank Merger Act
On September 17, the OCC approved a final rule amending its procedures for reviewing applications under the Bank Merger Act. The rule will aim to provide clearer guidelines for institutions regarding the OCC’s review process for bank mergers and ensure institutions remain relevant in the current financial landscape. Some commenters argued this change could increase the cost of applications — particularly for smaller banks. However, the OCC believes these changes will align the regulatory framework with current practices and promote transparency.
The final rule will also introduce a policy statement, included as Appendix A to 12 CFR Part 5, which will delineate the principles and statutory factors the OCC would consider when reviewing bank merger applications. The OCC will evaluate factors such as financial stability, financial and managerial resources, and the convenience and needs of a community. Applications with positive indicators, such as well-capitalized acquirers and no significant adverse effects on competition, will increase the likelihood of expeditious approval. Conversely, applications with indicators of supervisory or regulatory concerns, such as poor CRA ratings or ongoing enforcement actions, may be less likely to be approved unless these issues are adequately addressed.
In its consideration of financial stability, the OCC will assess factors such as the size of the combined institutions, the availability of substitute providers, and the complexity of the financial system. The OCC will apply a balancing test to weigh the financial stability risks posed by the pending transaction against the risk posed by denying it. The OCC may impose conditions on approval to address financial stability concerns, such as requiring asset divestitures or higher capital requirements. The policy statement will also outline the OCC’s approach to evaluating financial and managerial resources, such as considering the institutions’ capital levels, risk profiles, and managerial capabilities. The OCC plans to assess the needs of the community, considering factors such as branch closures, job losses and community investment initiatives. The final rule will go into effect on January 1, 2025.
FDIC issues list of banks examined for CRA compliance
On September 4, the FDIC released its latest evaluations of state nonmember banks for compliance under the CRA. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 requires public disclosure of evaluations and ratings for banks undergoing CRA examinations. These ratings assess how well banks meet the credit needs of their communities, including low- and moderate-income neighborhoods, while maintaining safe and sound operations. The FDIC’s recent evaluations included 54 banks, which received ratings in June 2024. Two banks were rated as “Needs to Improve” while the remaining institutions received a “Satisfactory” rating.
OCC releases August CRA evaluations for 17 institutions
On September 3, the OCC released its Community Reinvestment Act (CRA) performance evaluations for August. The OCC evaluated 17 entities, including national banks, federal savings associations and insured federal branches of foreign banks. The assessment framework has four ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. Of the 17 evaluations reported by the OCC, 10 entities were rated “Satisfactory,” seven entities were rated “Outstanding,” and none were rated “Needs to Improve” or “Substantial Noncompliance.” A full list of the bank evaluations can be found here.
FDIC announces its CRA evaluations since May
On August 5, the FDIC released an updated list of banks evaluated for compliance with the CRA in May, June, July and August. In May, the FDIC disclosed a list of evaluations of 56 banks, of which two were rated “outstanding,” 53 were rated “satisfactory,” and one was rated as “needs to improve.” In June, the FDIC disclosed a list of evaluations of 60 banks, of which four were rated “outstanding,” 53 were rated “satisfactory,” and three were rated as “needs to improve.” In July, the FDIC disclosed a list of evaluations of 64 banks, of which two were rated “outstanding,” 58 were rated “satisfactory,” and four were rated as “needs to improve.” In August, the FDIC disclosed a list of evaluations of 54 banks, of which two were rated “outstanding,” 51 were rated “satisfactory,” and one was rated as “needs to improve.”
Bank regulators appeal to 5th Circuit to lift district court’s final rule ban
On July 18, the OCC, FDIC, and the Fed (the federal banking agencies or FBAs) submitted a brief requesting that the U.S. Court of Appeals for the Fifth Circuit hold oral argument and reverse the U.S. District Court for the Northern District of Texas’ decision to preliminarily enjoin a recently issued Final Rule implementing the Community Reinvestment Act (CRA). The final rule had set forth processes for the FBAs to assess whether the depository institutions they supervise would be “meeting the credit needs of its entire community.” The CRA’s final rule, announced in October 2023, would modernize the CRA, create a new category of assessment areas, and subject large banks to new development tests, among others (covered by InfoBytes here). In February of this year, and previously covered by InfoBytes, several trade associations (plaintiffs) sued the FBAs, claiming the new final rule created a “wholesale and unlawful change” to the 50-year-old statute. The district court agreed and placed a preliminary injunction on the final rule. The FBAs argued that the district court erred in granting the plaintiffs’ preliminary injunction by accepting the “grafting” of two CRA exclusions found nowhere in the statute. The regulators also argued that the CRA’s final rule was an “appropriate exercise” of their authority. Additionally, the regulators argued the district court erred in its conclusion that “any amount of nonrecoverable costs” should be considered irreparable harm. Last, the regulators averred that the district court failed to consider the equities and the public interest weight against granting the preliminary injunction.
The FBAs now, in their appeal to the 5th Circuit, made four arguments based on these alleged errors. First, the FBAs contended they did not exceed their statutory authority by issuing the final rule, which evaluated a bank’s retail lending in facility-based assessment areas because “for certain banks, the bank’s ‘entire community’ includes both the geographic areas where the bank maintained deposit-taking facilities as well as other geographic areas where the bank conducted retail lending.” Second, the regulators emphasized again they did not exceed their statutory authority by including deposit products and digital delivery systems when evaluating whether “credit needs” were being met. Third, the regulators argued that the district court erred in finding that plaintiffs showed “irreparable harm.” Fourth, the FBAs say that the district court’s assessment of the balance of equities and public interest was flawed. For these reasons, it was the regulators’ position that the district court erred in granting the preliminary injunction and that its decision be reversed.
FDIC, Fed, and OCC announce 2024 CRA-eligible distressed and underserved areas
On July 12, the FDIC, Fed, and OCC released a list of distressed or underserved nonmetropolitan middle-income areas eligible for CRA credit. The list identified regions where banks’ revitalization or stabilization activities can receive CRA consideration, reflecting local economic conditions like unemployment, poverty and population changes. The designations will be valid for 12 months, with a one-year lag period for areas previously included in 2023, but not in the current list. Past lists and criteria for designating these areas can be found here.
OCC releases June CRA evaluations for 21 institutions
Recently, the OCC released its Community Reinvestment Act (CRA) performance evaluations for June. The OCC evaluated 21 entities, including national banks, federal savings associations, and insured federal branches of foreign banks. The assessment framework has four possible ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. Of the 21 evaluations reported by the OCC, 14 entities were rated “Satisfactory,” six entities were rated “Outstanding,” and one was rated “Needs to Improve.” A full list of the bank evaluations is available here. In the CRA FAQ, the OCC details how it evaluates and rates financial institutions based two categories: first, the institution, examining factors such as capacity, constraints, business strategies, competitors, and peers, and second, the community it serves, analyzing its demographic particulars, economic data, and the availability of lending, investment, and service opportunities.
OCC releases May CRA evaluations for 19 institutions
On June 3, the OCC released its Community Reinvestment Act (CRA) performance evaluations for May. The OCC evaluated 19 entities including national banks, federal savings associations, and insured federal branches of foreign banks. The assessment framework incorporated four possible ratings: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. Of the 19 evaluations reported by the OCC, eleven entities were rated “Satisfactory,” and eight entities were rated “Outstanding.” There were no institutions that received a rating of “Needs to Improve.” A full list of the bank evaluations is available here. In the FAQ section regarding the implementation of the CRA, the OCC detailed how it evaluated and rated financial institutions both on an institutional level and a community level. This explanation included an examination of institutional factors such as capacity, constraints, business strategies, competitors, and peers, as well as an analysis of the characteristics of the communities served by these institutions, which covered demographic particulars, economic data, and the availability of lending, investment, and service opportunities.
OCC and FDIC release CRA evaluations on 69 banks
On May 2, the OCC released its CRA performance evaluations for April and the FDIC released its evaluations for February. The OCC evaluated 13 national banks, federal savings associations, and insured federal branches of foreign banks. Of the 13 evaluations, most entities were rated “Satisfactory,” one entity was rated “Outstanding,” and one entity was rated as “Needs to Improve.” The FDIC released its May list of state nonmember banks of assigned CRA ratings in February. Out of 56 evaluations, two banks were rated “Outstanding,” 52 were rated as “Satisfactory,” one bank was rated as “Needs to Improve,” and one bank was rated as “Substantial Noncompliance.”