For immediate release

The Federal Reserve Board today announced its approval of the notice filed by Star Banc Corporation, Cincinnati, Ohio, to merge with Great Financial Corporation and thereby acquire its wholly owned subsidiary savings association, Great Financial Bank, F.S.B., Louisville, Kentucky. Attached is the Board's Order relating to this action.

Star Banc Corporation Cincinnati, Ohio Order Approving the Acquisition of a Savings Association

Star Banc Corporation ("Star"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to merge with Great Financial Corporation ("Great Financial"), and thereby acquire its wholly owned subsidiary savings association, Great Financial Bank, F.S.B. ("Thrift"), Louisville, Kentucky.1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 55,403 (1997)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 4 of the BHC Act. Star, with total consolidated assets of approximately $10.8 billion, operates one subsidiary bank with branches in Ohio, Indiana, and Kentucky.2 Star is the 16th largest depository institution in Kentucky, controlling deposits of approximately $597 million, representing 1.4 percent of total deposits in depository institutions in the state ("state deposits").3 Great Financial is the fifth largest depository institution in Kentucky, controlling deposits of approximately $1.5 billion, representing 3.6 percent of state deposits. On consummation of the proposal, Star would become the fourth largest depository institution in Kentucky, controlling deposits of approximately $2.1 billion, representing 5 percent of state deposits. Star is the 30th largest depository institution in Indiana, controlling deposits of approximately $429 million, representing less than 1 percent of state deposits. Great Financial is the 221st largest depository institution in the state, controlling deposits of approximately $6 million, representing less than 1 percent of state deposits. On consummation of the proposal, Star would remain the 30th largest depository institution in Indiana, controlling less than 1 percent of state deposits. The Board previously has determined by regulation that the operation of a savings association by a bank holding company is closely related to banking for purposes of the BHC Act.4 In making this determination, the Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4 of the BHC Act and Regulation Y. Star has committed to conform all of Thrift's activities to those permissible under section 4(c)(8) of the BHC Act.5 Competitive Considerations In order to approve the proposal, the Board also must determine that the performance of the proposed thrift activities is a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."6 As part of the Board's evaluation of these factors, the Board has carefully considered the competitive effects of the proposal in light of all the facts of record. Star and Great Financial compete directly in the Marion County, Kentucky, banking market.7 On consummation of the proposal, Star would become the largest depository institution in the market, controlling deposits of approximately $58.6 million, representing 30.8 percent of total deposits in depository institutions in the market ("market deposits").8 Concentration in the Marion County banking market, as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines") would increase by 175 points to 2,697.9 The effect of the proposal on market concentration as measured by the HHI is relatively small, and the proposal would not exceed the DOJ Guidelines. In addition, five depository institutions, including Star, would continue to operate in the market, including two depository institutions with more than 25 percent of market deposits, one depository institution with more than 10 percent of market deposits, and one depository institution with more than $1 billion of deposits. Based on these and all other facts of record, the Board concludes that the consummation of the proposal would not result in any significantly adverse effects on competition or on the concentration of banking resources in the Marion County banking market or any other relevant banking market. Other Considerations In connection with its review of the public interest factors under section 4 of the BHC Act, the Board also has carefully reviewed the financial and managerial resources of Star and Great Financial and their respective subsidiaries and the effect the transaction would have on such resources in light of all the facts of record.10 The Board has reviewed, among other things, confidential reports of examination and other supervisory information received from the primary federal supervisors of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources of the organizations involved in the proposal are consistent with approval. Record of Performance under the Community Reinvestment Act In acting on a proposal to acquire a savings association, the Board has traditionally reviewed the records of performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA") by the institutions involved in a proposal.11 The Board has reviewed the records of performance of Star's subsidiary bank, Star Bank, N.A., Cincinnati, Ohio ("Star Bank"), and Thrift in light of all the facts of record, including comments regarding Star Bank's efforts to help meet the credit needs of local communities. The Board received two comments opposing the proposal, and Star, as part of its response to the comments, submitted letters from more than 70 organizations commending it for its CRA-related activities. Organizations commending Star Bank's efforts under the CRA included community organizations, government officials, developers, educators, and local businesses.12 These commenters noted the bank's leadership efforts in and contributions to community development projects. They also praised Star Bank's lending activities, particularly in the areas of community development lending and direct lending to homeowners. In addition, several commenters noted favorably the bank's record of opening branches in low- and moderate-income ("LMI") areas. Two commenters questioned Star Bank's record of CRA performance, particularly the bank's record of lending to LMI and minority borrowers in Ohio, on the basis of 1996 data submitted under the Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA").13 One commenter also contended that Star Bank's participation in government sponsored lending programs and contributions to community development organizations were inadequate.14 The other commenter maintained that Star Bank should improve its programs for community development and affordable housing loans in Kentucky.15 A. CRA Performance Examinations The Board has reviewed the examinations by the primary federal supervisors of the CRA performance records of the relevant institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor.16 Star Bank received an overall rating of "outstanding" from its primary federal supervisor, the OCC, at its most recent evaluation for CRA performance, as of December 1996 ("1996 Examination"). The 1996 Examination was conducted under the revised CRA regulations for large depository institutions and large bank holding companies, and rated Star Bank's CRA performance record under separate tests designed to measure lending, investments, and services that assist in meeting the credit needs of the communities served.17 Star Bank received "outstanding" ratings under the lending and service tests and a "high satisfactory" rating under the investment test.18 The 1996 Examination also rated Star Bank's CRA performance record separately in Ohio, Kentucky, and Indiana, and in a multistate Metropolitan Statistical Area that includes Cincinnati and other portions of Ohio and portions of Kentucky and Indiana ("Cincinnati MSA").19 Star Bank's CRA performance record in Ohio20 and in the Cincinnati MSA was rated "outstanding."21 In Kentucky22 and Indiana,23 Star Bank received "satisfactory" CRA performance ratings. Thrift received a "satisfactory" rating from its primary federal supervisor, the Office of Thrift Supervision, at its most recent CRA examination as of September 1996. The Board has carefully considered the CRA performance record of Star Bank in general, and, in particular, its records in Ohio and Kentucky, in light of the comments received. This review included all aspects of Star Bank's CRA-related activities, including its farm, affordable housing, and small-business lending activities; its community investment and development programs; and its initiatives to increase lending in LMI areas. The Board also has considered that, excluding the Cincinnati MSA, Star Bank's assessment areas in Ohio contain 168 of the total 258 branches operated by the bank and account for approximately 59 percent of the bank's total deposits. In Kentucky, excluding the Cincinnati MSA, the bank's sole assessment area contains only three of the bank's branches, serves a total population of 26,000, and accounts for approximately 1 percent of the bank's total deposits.24 B. Lending Performance Record of Star Bank In General. The 1996 Examination concluded that Star Bank demonstrated excellent responsiveness in serving the credit needs of its assessment areas, particularly in LMI areas and to LMI borrowers. The geographic distribution of the bank's loans, including home mortgage, small business, and small farm loans, showed good penetration within its assessment areas. Examiners also considered the distribution of these types of loans among borrowers of different income levels to be excellent. HMDA data from July 1, 1994, through June 30, 1996, showed that 34 percent of the number of HMDA loans and 19 percent of the dollar amount of HMDA loans were made to LMI individuals. In addition, Star Bank originated 2,092 small business loans and 44 small farm loans, totaling approximately $814 million, between January 1995 and June 1996. Thirty percent of the small business loans and 93 percent of the small farm loans were to organizations with revenues of less than $1 million. Fifty-nine percent of the number of small business and small farm loans originated were for loan amounts of less than $100,000 during this period. Examiners also concluded that the bank originated a high level of community development loans. The 1996 Examination noted, for example, that Star Bank originated 21 loans totaling approximately $70.7 million from 1994 to July 31, 1996, in which other lenders purchased low-income housing tax credits for the purpose of rehabilitating 1,848 rental units of affordable housing. The bank entered into an agreement with the City of Cleveland to provide $25 million in loans for LMI neighborhoods from 1994 to 1998, and as of June 30, 1996, Star Bank had exceeded this commitment by originating loans totaling $25.9 million.25 In addition, Star Bank is a participant in the Cincinnati Development Fund ("CDF"), and, as of June 30, 1996, had outstanding loans in the amount of $2.1 million out of $5.4 million in loan commitments made through the CDF.26 Star Bank also offers two loan programs sponsored by the Small Business Administration ("SBA"),27 and participates in the State of Ohio 166 Loan Program.28 Ohio and Kentucky. Examiners rated Star Bank's lending performance in Ohio "outstanding." The 1996 Examination found that the geographic distribution of loans, including home mortgage, small business and small farm loans, reflected good penetration of its communities and that the distribution of loans based on the income of the borrower was excellent. Examiners noted that the volume of mortgage loans in the bank's assessment areas to LMI households was good in relation to the percentage of LMI households in the assessment areas. Star Bank also originated 260 small business and small farm loans in 1995 and through the first six months of 1996, totaling $66 million, and made 31 percent of these loans to small businesses and small farms with less than $1 million in annual revenues and 29 percent of these loans in LMI areas. In addition, examiners favorably noted the bank's high level of community development loans and extensive use of the SBA's 504 and 7A loan programs. In Kentucky, excluding the Cincinnati MSA, examiners rated the bank's lending performance "high satisfactory." Overall, Star Bank's lending demonstrated a good distribution to borrowers by income levels. The bank also made ten small business loans, totaling $236,000 and representing 40 percent of the total number of small business loans made from January 1, 1995, through June 30, 1996, to organizations with less than $1 million in annual revenues. In northern Kentucky within the Cincinnati MSA, the bank made six community development loans totaling approximately $3.9 million.29 The Board also has considered Star Bank's lending record, particularly in Ohio, in light of comments about the bank's HMDA-reported lending in 1996. These data show that in most of Star Bank's MSA assessment areas in Ohio its percentages of loan originations to African Americans, census tracts with predominantly minority and LMI residents, and LMI individuals generally exceed the average percentages reported by lenders in the aggregate. The data also reflect some disparities in the rate of loan originations, denials, and applications between minority and nonminority borrowers. The Board is concerned when the record of an institution indicates such disparities in lending, and believes that all banks are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending but also equal access to credit by creditworthy applicants regardless of race. The Board recognizes, however, that HMDA data alone provide an incomplete measure of an institution's lending in its community because these data cover only a few categories of housing-related lending. HMDA data, moreover, provide only limited information about the covered loans.30 HMDA data, therefore, have limitations that make the data an inadequate basis, absent other information, for concluding that an institution has not assisted in meeting the communities' credit needs or has engaged in illegal lending discrimination. Because of the limitations of HMDA data, the Board has carefully considered that data in light of other information. Specifically, the Board has considered information on all of Star's lending and other CRA-related activities and information in examination reports and other supervisory information that provide an on-site evaluation of compliance with the fair lending laws by Star. As discussed above, this information indicates that Star Bank assists in meeting the credit needs of all its communities, including LMI and minority borrowers. The 1996 Examination, moreover, found no violations of the substantive provisions of fair lending laws and determined that Star Bank's fair lending policies, procedures, training, and monitoring were effective. Star Bank also has taken steps to increase its lending to LMI individuals and in LMI areas. The bank's Home Advantage Program ("HAP"), for example, provides loans for affordable housing with flexible underwriting criteria.31 In 1995, Star Bank originated 1,112 HAP loans totaling $56.4 million and representing 28 percent of all home purchase loans made by the bank that year. As of June 30, 1996, Star Bank originated an additional 371 HAP loans totaling $20 million. The bank also offers home improvement loans with reduced interest rates to residents in LMI areas through its Home Advantage Home Improvement Program. The bank made 601 loans totaling $4.9 million under the program in 1995 and an additional 349 loans totaling $2.7 million during the first six months of 1996. In June 1994, Star announced a comprehensive $1.5 billion commitment for home mortgage, home improvement, small business, small farm, and community development lending over five years in 33 counties served by the company. The program emphasizes loans in low-income areas and loans to LMI and minority borrowers and businesses owned by minorities and women. By the end of 1996, Star had achieved more than half its goals for home mortgage and home improvement lending and had exceeded its goals for small business and community development lending. Total lending was approximately $1.6 billion, and an additional $400 million of loans in these categories were made during the first six months of 1997. Star intends to include the markets currently served by Thrift under the program. C. Investment and Service Performance Records of Star Bank In General. The 1996 Examination noted a significant level of qualified community development investments. Examiners also considered the bank's responsiveness to community economic needs to be good and commended the bank for significant use of innovative and complex investments. Since its prior CRA evaluation in 1994, Star Bank made $2.5 million of qualified investments, including funding for approximately $1.9 million of its $6.1 million commitment to low-income housing tax credit projects. Examiners also found that the bank provided a readily accessible system of full service branches that demonstrated a good distribution of branches throughout the bank's communities, including LMI areas. The 1996 Examination commended Star Bank for its extensive use of alternative systems for providing retail banking services, such as a 24-Hour Customer Service Center, enhanced automated teller machines, and alternative financing for borrowers who failed to qualify for conventional financing, and praised its relatively high level of community development services. Ohio and Kentucky. The 1996 Examination rated Star Bank's performance in Ohio "high satisfactory" under the investment test and "outstanding" under the service test. Examiners concluded that the bank had a reasonable amount of qualified investments in the state and exhibited good responsiveness to the state's economic development needs. Overall, Star Bank made approximately $937,000 in qualified investments, including funding approximately $880,000 of its $3.4 million commitment to projects qualifying for low income housing tax credits. In addition, examiners found that the bank's full service branches and alternative systems for providing retail banking services were accessible in all income areas, including LMI areas, and that the bank's record of opening and closing branches had improved the accessibility of banking services. Star Bank also offered a relatively high level of community development services in Ohio. In Kentucky, Star Bank's performance under the investment and service tests was rated "low satisfactory" and "high satisfactory," respectively, in the 1996 Examination. Examiners recognized that the bank's assessment area in Kentucky offered very little opportunity for making qualified investments. Star Bank's branches and alternative systems for providing retail banking services, however, were accessible in all income areas, including LMI areas. The bank also provided a wide range of community development services, including credit counseling services in LMI areas. D. Conclusion on CRA Performance The Board has carefully reviewed all the facts of record in considering the CRA performance record of Star Bank and Thrift, including all of the comments received, responses to the comments, and the CRA performance records of Star Bank and Thrift, including the relevant reports of examination.32 Based on a review of the entire record and for the reasons discussed in the order, the Board concludes that considerations relating to the CRA performance records of the institutions involved are consistent with approval of the proposal. Conclusion The Board also concludes that consummation of the proposal would result in benefits to consumers. The proposal would enable Star Bank to provide Thrift's customers with access to a broad range of services. Additionally, there are public benefits to be derived from permitting capital markets to operate so that bank holding companies may make potentially profitable investments in nonbanking companies when those investments are consistent, as in this case, with the relevant considerations under the BHC Act, and public benefits from permitting banking organizations to allocate their resources in the manner they believe is most efficient. The Board also believes that the conduct of the proposed activities within the framework established in Regulation Y is not likely to result in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, or unsound banking practices, that would outweigh the public benefits of the proposal, such as increased consumer convenience. Accordingly, the Board has determined that the balance of the factors considered under the proper incident to banking standard of section 4(c)(8) of the BHC Act is consistent with approval. Based on the foregoing and all other facts of record, the Board has determined that the notice should be, and hereby is, approved. The Board's approval of the notice is specifically conditioned on compliance by Star with commitments made in connection with the notice. The Board's determination also is subject to all the conditions in Regulation Y, including those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the BHC Act and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in reaching this decision shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decisions, and, as such, may be enforced in proceedings under applicable law. This proposal shall be consummated not later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.

By order of the Board of Governors,33 effective December 18, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 Star also has requested the Board's approval of an option to purchase up to 19.9 percent of the voting shares of Great Financial under certain circumstances. The option would expire on consummation of the proposed merger with Great Financial. 2 Asset data are as of June 30, 1997. Deposit data are as of June 30, 1996. 3 In this context, depository institutions include commercial banks, savings banks, and savings associations. 4 12 C.F.R. 225.28(b)(4). 5 Thrift engages through a subsidiary in the sale of certain insurance products and annuities that are not permissible for a bank holding company under the BHC Act. Star has committed that it will conform the insurance and annuity activities of Thrift to the requirements of section 4 of the BHC Act within two years after consummation of the proposal and that Thrift will cease selling any new insurance policies or annuities immediately on consummation of the proposal. Star also has committed to conform all real estate activities of Thrift to the requirements of section 4 of the BHC Act within two years after consummation of the proposal. 6 12 U.S.C. § 1843(c)(8). 7 The Marion County, Kentucky, banking market is defined as Marion County, Kentucky. 8 Market data are as of June 30, 1996. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of Thrift would be acquired by a commercial banking organization under the proposal, Thrift's deposits are included at 100 percent in the calculation of the pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990). 9 Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Department of Justice has informed the Board, however, that a bank merger or acquisition in a highly concentrated market generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 10 See 12 C.F.R. 225.26. 11 See Banc One Corporation, 83 Federal Reserve Bulletin 602 (1997). 12 These commenters included the City of Cleveland, Ohio, the Urban League of Greater Cincinnati, the Ohio Capital Corporation for Housing, the Ohio Tri-State Hispanic Chamber of Commerce, the City of Covington, Kentucky, and Catholic Social Services of Northern Kentucky. 13 These commenters are the Ohio Community Reinvestment Project, Columbus, Ohio, and the Metropolitan Housing Coalition, Louisville, Kentucky. 14 This commenter also stated that the bank, compared to other depository institutions, paid less interest on accounts in which the interest is used to fund legal services for the poor and charged higher fees for basic banking services, which particularly affect LMI customers. Star maintains that its deposit products are competitive with those offered by other depository institutions and that it offers affordable deposit products and basic banking services. The Board also has considered these comments in light of evaluations by examiners of the bank's record of providing banking services to its communities and of complying with fair lending laws. 15 This commenter also alleged, in general, that affordable housing loans diminish when a local depository institution is acquired by a larger out-of-state banking organization. As explained above, the Board has carefully reviewed Star Bank's record of assisting to meet the credit needs of the communities it serves, including in Kentucky. The CRA requires that every bank operating in more than one state, including such a bank owned by an out-of-state parent holding company, be regularly examined and rated on its performance in helping to meet the credit needs of its community on a state-by-state basis. Star Bank's activities in Kentucky have been and would continue to be reviewed by its primary federal regulator, the Office of the Comptroller of the Currency ("OCC"), in its performance examinations and by the Board in future applications by Star to acquire a depository facility under the BHC Act. 16 The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA examination is an important and often controlling factor in the consideration of an institution's CRA record and that reports of these examinations will be given great weight in the applications process. 54 Federal Register 13,742 and 13,745 (1989). 17 See 12 C.F.R. Part 25. The federal financial supervisory agencies jointly promulgated new regulations to implement the CRA in 1995. See 60 Federal Register 22,156 (May 4, 1995). Although the revised regulations did not become effective for large retail banks like Star Bank until July 1, 1997, Star Bank requested that the 1996 Examination be conducted under the revised regulations. Star Bank also was rated "outstanding" for CRA performance at its two previous examinations in 1992 and 1994. 18 The ratings for performance under the lending, investment, and services tests are: "outstanding," "high satisfactory," "low satisfactory," "needs to improve," and "substantial noncompliance." Under the revised CRA regulations, the lending test is weighted more heavily than the investment and service tests in determining a bank's overall CRA performance rating. 19 Section 110 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Pub. L. No. 103-328, 108 Stat. 2338 (1994)) amended the CRA to require that the federal financial supervisory agencies separately rate the CRA performance record in each state and in each multistate metropolitan area where an interstate banking organization maintains a branch. 12 U.S.C. § 2906(d). 20 Star Bank designated 11 assessment areas in Ohio that include Cleveland, Columbus, Dayton, Highland County, and Preble County. 21 Star Bank designated three assessment areas within its Cincinnati service area. The first area is the Cincinnati region, which includes Hamilton County and portions of Clermont and Warren Counties, all in Ohio. The second assessment area is the Indiana South-Eastern region, and the major city in the region is Lawrenceburg, Indiana. The remaining assessment area is the Kentucky-Northern region, which contains the cities of Covington and Newport, Kentucky. Also included in the Cincinnati MSA is Pendleton County, Kentucky, which Star Bank included in its Central Kentucky region. 22 The assessment area includes Carroll and Marion Counties, both in Kentucky. 23 The assessment area includes Fayette and Wayne Counties and a portion of Randolph County, all in Indiana. 24 The Cincinnati MSA contains 74 of the bank's branches and accounts for 37 percent of the bank's deposits. Star Bank received "outstanding" ratings under the lending and investment tests and a "high satisfactory" rating under the investment test in the Cincinnati MSA. 25 In two separate projects in Cleveland, the bank loaned $7.3 million to nonprofit developers to build and rehabilitate affordable housing. 26 The CDF assists in financing affordable housing by originating below market-rate loans to nonprofit and for-profit developers in the Cincinnati area, which includes Hamilton, Warren, Butler, and Clermont Counties in Ohio and Boone, Campbell, and Kenton Counties in Kentucky. 27 Star Bank originated 20 loans under the SBA 504 loan program in 1995, totaling $7.2 million, and 19 SBA 504 loans, totaling $4.6 million, through July 1996. In the SBA 7A loan program, Star Bank originated 97 loans in 1995, totaling $17.8 million, and 36 SBA 7A loans, totaling $5.6 million through June 1996. 28 This program provides direct loans of less than $200,000 to businesses in Ohio that will create new jobs. 29 Star Bank's assessment area in Kentucky outside the Cincinnati MSA consists of whole counties, and the bank's CRA examiners determined that it did not arbitrarily exclude any LMI areas and conformed to the requirements of the CRA. 30 The data, for example, do not provide a basis for an independent assessment of whether an applicant who was denied credit was, in fact, creditworthy. Credit history problems and excessive debt levels relative to income (reasons most frequently cited in a credit denial) are not available from HMDA data. 31 Eligibility for the HAP loan program is based on income and the number of household members. The program permits higher debt-to-income ratios and a 3 percent minimum down payment that can be in the form of a gift from a relative or a grant from a nonprofit organization. The program also does not require private mortgage insurance. 32 Commenters criticized Star for failing to enter into a binding written agreement with their organizations. The Board has stated that, although communications between depository institutions and community groups are a valuable method of assessing the credit needs of the community, the CRA does not mandate a depository organization to enter into an agreement with any organization. See Chemical Banking Corporation, 82 Federal Reserve Bulletin 239 (1996). 33 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not voting: Governor Meyer.

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1997 Orders on banking applications