skip to main navigation skip to secondary navigation skip to content
Board of Governors of the Federal Reserve System
skip to content
Federal Reserve Board of Governors

Regulations

Compliance Guide to Small Entities

Regulation BB: Community Reinvestment
12 CFR 228

This description should not be interpreted as a comprehensive statement of the regulation. Rather, it is intended to give a broad overview of the regulation's requirements. The full regulation is available on the Government Printing Office web site.

Regulation BB implements the Community Reinvestment Act of 1977 (CRA), which requires that the federal regulators of banks and thrifts encourage those institutions to help meet the credit needs of the local communities in which they are chartered. The CRA directs the regulatory agencies to assess each institution's record in meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operations. The CRA also directs the agencies to take these records into account in evaluating the institutions' applications for deposit facilities, such as a merger with another bank.

Regulation BB implements these requirements and addresses a variety of related matters, including the collection, maintenance, and reporting of data about an institution's performance in meeting the credit needs of its community and the institution's public disclosure of materials evaluating or commenting on its performance. The other three federal bank and thrift regulatory agencies have promulgated regulations substantially identical to Regulation BB.

A general description of the regulation, by section, follows.

Subpart A: General

Section 228.11 Authority, purposes, and scope
Lists the provisions of law that authorize the Federal Reserve Board to issue the regulation. Mirrors the statutory directives to the agencies summarized above. Also identifies the institutions to which the regulation applies.

Section 228.12 Definitions
Defines key terms used in the regulation, including terms used in this summary, such as "wholesale bank" and "community development."

Subpart B: Standards for Assessing Performance

Section 228.21 Performance tests, standards, and ratings, in general
States that the Board applies the lending, investment, and service tests in evaluating a bank's performance, except that (1) the Board generally applies the community development test for a designated wholesale or limited-purpose bank, (2) the Board generally applies the small-bank performance standards in evaluating the performance of a small bank or a bank that was a small bank during the preceding calendar year, and (3) the Board evaluates the performance of a bank under a strategic plan if the bank submits a plan and the Board approves it.

Also states that the Board applies these tests and standards, and considers whether to approve a strategic plan, in the context of information about matters such as the bank's capacity and constraints and its past performance. Further states that the Board assigns each bank a rating--of "outstanding," "satisfactory," "needs to improve," or "substantial noncompliance"--reflecting its record in helping to meet the credit needs of its community. Clarifies that Regulation BB and the CRA do not require banks to take actions inconsistent with safe and sound operations.

Section 228.22 Lending test
States that the lending test evaluates a large retail bank's record of helping to meet the credit needs of its assessment area(s) through its lending activities by considering certain types of lending. Specifies the criteria by which the Board evaluates a bank's lending performance. Also sets forth the rules governing the Board's treatment, in a bank's evaluation, of lending by the bank's affiliates, by consortia in which the bank participates, or by third parties in which the bank has invested. Finally, cross-references appendix A, which describes how the Board rates a bank's performance, including its lending performance.

Section 228.23 Investment test
States that the investment test evaluates a large retail bank's record in helping to meet the credit needs of its assessment area(s) through qualified investments that benefit the bank's assessment area(s) or a broader statewide or regional area that includes the assessment area(s). Bars double-counting of activities under the lending or service test and the investment test. Sets forth the rules governing the Board's treatment, in a bank's evaluation, of investments by the bank's affiliates. Also clarifies how the Board treats a bank's donation of certain branch premises to a minority depository institution or a women's depository institution; sale of such premises on favorable terms to such an institution; or provision of such premises rent-free to such an institution.

Specifies the criteria by which the Board evaluates a bank's investment performance, and cross-references the ratings scheme in appendix A.

Section 228.24 Service test
Provides that the service test evaluates a large retail bank's record in helping to meet the credit needs of its assessment area(s) by analyzing the availability and effectiveness of a bank's systems for delivering retail banking services and the extent, innovativeness, and responsiveness of its community development services. Explains that community development services must benefit a bank's assessment area(s) or a broader statewide or regional area that includes the assessment area(s). Sets forth the rules governing the Board's treatment, in a bank's evaluation, of community development services provided by affiliates of the bank. Cross-references the ratings scheme in appendix A.

Section 228.25 Community development test for wholesale or limited-purpose banks
Provides that the Board assesses a designated wholesale or limited-purpose bank's record in helping to meet the credit needs of its assessment area(s) by using the community development test, which relates to the bank's community development lending, qualified investments, or community development services. Explains how a bank can be designated as wholesale or limited-purpose. Also sets forth the criteria by which the Board evaluates such a bank's community development performance.

Clarifies how the Board will treat, for purposes of the community development test, lending, investments, and services provided by affiliates of the bank, consortia in which it participates, or third parties in which it invests. Provides that the Board considers qualified investments, community development loans, and community development services that benefit areas within the bank's assessment area(s) or a broader statewide or regional area that includes the assessment area(s) and, in addition, that the Board considers these activities outside the bank's assessment area(s) if the bank has adequately addressed the needs of its assessment area(s). Finally, cross-references the ratings scheme in appendix A.

Section 228.26 Small-bank performance standards
Sets forth the streamlined criteria by which the Board evaluates the record of a small bank, or a bank that was a small bank during the preceding calendar year, in helping to meet the credit needs of its assessment area(s). Indicates that examiners will consider (1) the bank's loan-to-deposit ratio, (2) the percentage of loans and, as appropriate, other lending-related activities located in the bank's assessment area(s), (3) the bank's record of lending to and, as appropriate, engaging in other lending-related activities for borrowers of different income levels and for businesses and farms of different sizes, (4) the geographic distribution of the bank's loans, and (5) the bank's record of taking action, if warranted, in response to written complaints about its performance in helping to meet credit needs in its assessment area(s). Also cross-references the ratings scheme in appendix A.

Section 228.27 Strategic plan
Describes the conditions under which the Board will evaluate a bank's record in helping to meet the credit needs of its assessment area(s) under a strategic plan. Explains that the Board's approval of a plan does not affect the bank's obligation, if any, to report data under section 42. Describes the permissible and required features of a plan and how a bank must develop a plan. Also clarifies how the Board decides whether to approve a plan and how a bank may amend a plan. Finally, cross-references the ratings scheme in appendix A.

Section 228.28 Assigned ratings
Explains that the Board assigns a bank one of the four ratings (see section 228.21) on the basis of its performance under the applicable tests, standards, or plan. Clarifies how the Board develops an overall rating from ratings under the lending, investment, and service tests respectively. Clarifies that evidence of discriminatory or other illegal credit practices adversely affects the Board's evaluation of a bank's performance.

Section 228.29 Effect of CRA performance on applications
Provides that the Board takes account of a bank's record of CRA performance when evaluating specified applications for deposit facilities. Explains that in considering the bank's CRA performance in such an application, the Board takes account of any views expressed by interested parties that are submitted in accordance with the Board's Rules of Procedure. States that a bank's record of performance may be the basis for denying or conditioning approval of one of the specified types of application. Finally, cross-references definitions in the Bank Holding Company Act.

Subpart C: Records, Reporting, and Disclosure Requirements

Section 228.41 Assessment-area delineation
Provides that a bank must delineate one or more assessment areas within which the Board evaluates the bank's record in helping to meet the credit needs of its community. Specifies the geographical areas of which the bank's assessment area(s) must consist, as well as a bank's authority to adjust the boundaries of its assessment area(s). Sets forth certain limitations on the delineation of assessment area(s) and a special rule regarding the assessment area(s) of banks serving military personnel. Clarifies that the Board uses the assessment area(s) delineated by a bank in its evaluation of the bank's CRA performance unless the Board determines that the assessment area(s) do not comply with the requirements set forth in this section.

Section 228.42 Data collection, reporting, and disclosure
Requires banks, except small banks, to collect and maintain certain data regarding small-business and small-farm lending. Also requires banks, except small banks or banks that were small during the preceding calendar year, to report certain data on such lending as well as on community development lending and home mortgage lending. Permits, but does not require, the collection and maintenance of data on consumer loans as well as other loan data. Describes the requirements, applicable to banks that elect to have the Board consider lending by their affiliates, for the collection, maintenance, and reporting of data about such lending; likewise, describes the requirements, applicable to banks that elect to have the Board consider lending by consortia or third parties, for the reporting of data about such lending.

Explains how these requirements apply to banks that qualify for evaluation under the small-bank standards but elect evaluation under the lending, investment, and service tests. Provides that a bank, except a small bank or a bank that was small during the preceding calendar year, must annually collect and report data for its assessment area(s).

Describes the annual disclosure statement that the Board prepares for each bank that reports data. Also describes the aggregate disclosure statements that the Board prepares for each metropolitan statistical area (MSA) (and the non-MSA part of each state) in conjunction with the other federal bank and thrift regulatory agencies. Finally, provides that the Board makes the disclosure statements available to the public at central data depositories.

Section 228.43 Content and availability of public file
Directs each bank to maintain a public file containing specified information, including all written comments received from the public for the current year and each of the previous two calendar years that specifically relate to the bank's performance in helping to meet community credit needs. Explains where a bank must make the required information available to the public. Banks must provide copies of public-file information upon request but may charge a reasonable fee not exceeding the cost of copying and mailing. Generally requires banks to update their public files by April 1 of each year.

Section 228.44 Public notice by banks
Requires each bank to provide in the public lobby of its main office and each of its branches an appropriate public notice.

Section 228.45 Publication of planned examination schedule
States that the Board publishes, at least thirty days in advance of the beginning of each calendar quarter, a list of banks scheduled for CRA examinations in that quarter.

Appendix A Ratings
Presents the ratings scheme.

Appendix B CRA notice
Presents text of public notices for compliance with section 228.44.

< Back to Regulation BB

Last update: August 2, 2013