How will loan data collection change given the pause on the 1071 rule? If that's not a topic for today, where can I find a good source for information regarding loan data collection? I would not make any changes until the Court rules on the 1071 challenge which will be this June. I suggest speaking with your CRA software vendor about how they are approaching the issue. I know of a vendor or two that claim they have developed the 1071 software already. 

∙ On the ORLA, is 50% based off of loan volume or dollar amount of loans? The ORLA component geographic areas are based on any major product line loans originated or purchased outside your FBAAs and RLAAs. That determination is made using the same formula for the FBAA major product lines – it’s an average of a product line’s share based on loan counts and dollars of all product line loans outside your FBAAs and RLAAs 

∙ Also, do we need to identify any ORLAs in 2024 or 2026? – The ORLA will become effective for 2026. 

∙ What will be the $ cost of not passing a CRA Examination? There are no fines, but you will incur a lot of legal expenses and have a big public relations problem and you won’t be able to expand until you attain a satisfactory PE. 

∙ Do we need to assess each component geographic area in an ORLA separately before rolling them up into one conclusion? No, you will need to determine the benchmarks for each component area and then weigh them to determine the benchmarks for each distribution test loan category. (this complicated process is explained in detail in our webinar series) 

∙ For the ORLA, will we have to perform all other CRA activities such as investments, community service, etc.? No – although you can get credit for CD activities outside your FBAAs when the new rule is implemented. 

∙ Does the ORLA only apply to large banks? – yes and certain intermediate banks if their AA volume is less than 50% 

∙ So, to even attempt a satisfactory we have to stay within our FBAA, which effectively pulls our lending numbers down (and in in this market where loan production is at a critically low period) or risk needs improvement to stay afloat? No, you may still achieve a satisfactory PE even if you lend outside your FBAAs, but you will need to stay on top of that lending and understand how you will be measured. 

∙ We have a branch at the very edge of a county which is far away and NOT in our MSA larger AA.  Can you eliminate that county as an AA? – If the branch is not in the county, it could be removed from your AA that is in the adjacent MSA.

∙ Please speak to contiguous counties and FBAAs.  What is required/expected? Any FBAA must consist of counties where you maintain deposit‐taking branches and the AA must be contiguous. So, it’s possible to have 2 FBAAs within a MSA if they are not connected when you delineate your FBAAs. On the other hand, you may have one FBAA within a MSA if you designate all the counties in the MSA as part of your FBAA 

∙ For the RLAA ‐ if a bank has 600 reportable small business loans but less than 400 are outside the FBAA, is the RLAA triggered or not? Your question is a bit confusing. If your bank originated or purchased 600 small businesses loans and 399 are in a MSA (the smallest geographic unit in a RLAA) outside your FBAA, that would not be enough SB lending to trigger a RLAA based on SB lending activity (however, if you did 150 or more closed‐end mortgages in a MSA outside your FBAA that would trigger a RLAA, but only for the closed‐end mortgages, not the SB loans) 

∙ Please give one example of a loan from a major product line that is made outside the FBAA.  For example, if a bank makes one residential mortgage at a ski area outside their facility‐based assessment area, does that trigger the ORLA? It depends on your product line lending outside your FBAAs. If you did 100 closed‐end mortgages and no other product line loans outside your FBAAs then the single loan in a ski resort would be a major product line loan and the result is that area becomes a component geographic area in your ORLA. The entire ORLA would be determined wherever else you extended a closed‐end mortgage outside your FBAAs (and any RLAAs that may be involved in your situation). 

∙ If the bank has more than 80% of HMDA and SB loans in their FBAA does the RLAA still apply if the bank generates more than 150 closed mortgages and/or 400 small businesses outside the FBAA? No, you would not need to designate a RLAA in that situation. However, you are not exempt from the ORLA. Effectively, those loans would be included in the ORLA. So, the exemption is not really meaningful. 

∙ Is the “80% inside the FBAA exception” based on the number of loans or dollar amount? It’s based on a combination of counts and $. 

∙ Do our Facility Based Assessment Area and Retailed Lending Assessment Area need to match? I am not sure what you mean by this question. The FBAA and RLAA are separate AAs. The FBAA is triggered by deposit‐taking facilities. The RLAA is triggered by closed‐ end mortgage volume and/or small business loan volume that is outside the FBAAs. 

∙ How would you account for a digital branch in the Facility Bases Assessment Area? The new rule addresses digital delivery systems as part of the Retail Products and Services Test. 

∙ For the Major product line calculations...do the ISBs have to do these? Yes ‐ any bank subject to the RLT must use the same methodology ‐ except IB's don't have to do it outside the FBAA's unless they do >50% outside FBAA lending.

∙ Do the banks still get assessed based on the current CRA guidelines until January, 2026? Yes 

∙ The timing of available peer data has historically been a challenge under the existing rule. Under the new rule, what challenges can banks anticipate regarding timely availability of data to measure a bank's CRA performance on at least an annual basis? The extremely tardy track record of the FFIEC is embarrassing. However, with respect to small business lending, the CFPB will take charge and their track record of releasing HMDA data within 60 days of the filing date suggests there may be a big improvement in the timely publication of that data. However, the FFIEC will continue to be responsible for reporting the CD data and other data required under the new rule. 

∙ Since branch opening/closing needs to be updated quarterly and the public file isn't released until Q2 will Q1 openings/closings need to be in the file on 4/1 or can those be updated on 7/1? Any branch openings or closings in the previous calendar quarter will need to be updated in the current calendar quarter. 

∙ Is this saying that we have to provide maps for the previous 3 years on top of the current year AA maps? §_.43 specifies different holding periods for different documents. With respect to AA maps the regulation preamble “clarifies” that matter by saying, “a bank is required to include in its public file a map of retail lending assessment areas, ‘as applicable’”. That’s perfectly clear! 

∙ What is the current test that is being replaced by the retail lending test? The Lending Test is the current test and includes 4 components, the AA ratio, GAP analysis, lending in LMI tracts and the Borrower Characteristics Test. 

∙ In light of the lawsuit being filed, as an intermediate bank (which would have become a small bank under the new CRA rule effective 4/1/2024) do we proceed as an intermediate bank? – Yes, the size definitions under the current rule remain in effect until January 1, 2026. 

∙ Where do we find the benchmarks for community and market data? The data needed to compute those benchmarks can be found in the annual A&D data and the annual demographic data released by the FFIEC.  However, the benchmarks are not provided by regulators. You would need to compute the benchmarks or ask a company such as GeoDataVision to retrieve the data and compute the benchmarks for you. 

∙ Do we know when regulators will begin examining under the new rule?  Our next exam will most likely be some time in 2026, so will they look at us under current reg, new reg, or a combination of both? The new rule reporting won’t be effective until January 1, 2027, so any exam conducted before then will be under the current rule. 

∙ Will the lawsuit that the ABA just filed against the CRA regulation have any impact? It may, depending on how the court responds. I believe it is possible that the court may issue a temporary injunction until the case is decided which will likely go all the way to the Supreme Court – which, if they take the case, won’t decide until 2025. ∙ How should large banks approach the initial years of CRA execution without benchmark info to guide level of performance? We know what the calibrated benchmarks will be based on the historical record of market data in your markets and existing community demographics. By and large the calibrated benchmarks will actually be the same as they have been since 1995 except that they will be explicit, and they will be applied only to the counts of loans originated and purchased, not loan values as done under the current rule. 

∙ If as a large institution, we have to delineate a Retail Lending Assessment Area and an Outside Retail Lending Area, what implications could this have for our institution? It means that almost all your lending outside your FBAA will be subject to Evaluation using benchmarks local to those areas. 

∙ Will there be new software requirements so banks can perform self‐assessments prior to exams? Geocoding CD loans and deposits for very large banks. Also, the ORLA will be a real challenge because of the component geographic areas. 

∙ How are banks able to get CRA Credit for activities they do nationwide? I assume you are referring to the ORLA and to the CD Financing Test. Regarding the ORLA, this is perhaps the most radical idea embedded in the new rule. It means anywhere in the USA where you originate or purchase a major product line loan (as determined by your lending activity within the ORLA) you will be held accountable based on comparisons to locally driven benchmarks. For the CD Finance Test the rule requires a bank to compute CD activity in your FBAAs and then within entire states and Multistate MSAs and then at the national level. The new rule requires the 2 calculations (FBAAs only and entire geographic areas within the geographic level being evaluated) be weighted based on a concept of “combined scores” which takes the scores for the geographic level based on FBAAs and all areas within the geographic level (i.e., including the FBAAs and the other geographic areas outside the FBAAs) and applies a weighting test based on loans and deposits inside your AAs. 

∙ What are the material changes to CD lending and CD investments? They will be combined, and their balances outstanding at year end from previous years will be included in addition to activity in the current year. There also is a separate community development Investment Test for the largest banks, 

∙ What are some considerations that should be made when deciding whether or not to opt in to the new CD Financing Test? We are currently an ISB, will be an intermediate bank under the new rule. Thank you! I would not elect to be examined under the CD Financing Test until the benchmarks are finally calibrated. “The devil you know may be better than the devil you don’t know”. 

∙ I thought there was a delay in the Public Notice? The new rule states that the Public Notice section §_.44 is applicable on April 1, 2024, however in January the regulators announced a “clarification” that banks will not be required to use the Public Notice in Appendix F until January 1, 2026 

∙ How should large banks approach the initial years of CRA execution without benchmark info to guide level of performance? We know what the calibrated benchmarks will be based on the historical record of market data in your markets and existing community demographics. By and large the calibrated benchmarks will actually be the same as they have been since 1995 except that they will be explicit, and they will be applied only to the counts of loans originated and purchased, not loan values as done under the current rule. So, get that benchmark data and self‐test against the 80% market calibrated benchmark and the 60% community calibrated benchmark. 

∙ If as a large institution, we have to delineate a Retail Lending Assessment Area and an Outside Retail Lending Area, what implications could this have for our institution? It means that almost all of your lending outside your FBAA will be subject to benchmarks local to those areas that are remote to your community. 

∙ Retail Lending Test, how will the bank document results, show examples of which loans and which deposits will be counted. For instance, are government loans and deposits included? Purchase commercial, residential and consumer loans count? All banks, even non‐reporters should be collecting their CRA data and monitoring it so they don’t go into a CRA exam blind. Government loans and deposits are not included in the loans and deposits used for CRA Performance Evaluations. ∙ Has anyone been able to sum up the expected number of hours/dollars to implement the new rule? Large bank >$10B, specifically. The lawsuit cites the OCC estimate of $91.8 million during the first year but then cites an ABA survey and extrapolates the real cost is more than $566 million of all large banks. According to the lawsuit the Agencies calculated that industrywide banks would expend between 105,500 and 235,000 hours annually in reporting, recordkeeping and disclosure responsibilities.