Community Reinvestment Act: Performance Context

This bulletin provides guidance to examiners regarding the expected treatment of bank operating subsidiaries when evaluating an institution's Community Reinvestment Act (CRA) record.

In conducting the lending test, examiners consider affiliate loans including loans made by operating subsidiaries only if requested by the bank. However, in developing and documenting the performance context for use in evaluating a bank's CRA record, examiners will consider the assets and profitability of the bank's subsidiaries. This will allow examiners to determine if a bank conducts certain lending activities in the bank and other activities in a subsidiary that could inappropriately influence an assessment of the bank's capacity and ability to lend or invest in its community.

In developing and documenting an institution's performance context, an examiner will review the institution's corporate structure and affiliations, its business strategy and major business products, its targeted markets or communities, its distribution methods to serve those communities, and its financial condition, capacity, and ability to lend or invest in its community. To facilitate this review, an examiner should gather information from annual reports, supervisory reports, prior CRA examination reports, community contacts, and bank management.

Examiners should consider subsidiary activities when assessing the bank's capacity for community reinvestment. Also, an asset and profitability analysis of those subsidiaries should be conducted to help understand the influence they may have on the bank's capacity to lend or invest in the community.

If you have any questions, please contact your supervisory office or the Community and Consumer Policy Department at (202) 649-5470.

Stephen M. Cross
Deputy Comptroller for Community and Consumer Policy