COMMUNITY REINVESTMENT ACT NOTICE

The Federal Community Reinvestment Act (CRA) requires the Federal Reserve Board to evaluate our performance in helping to meet the credit needs of this community, and to take this evaluation into account when the Board decides on certain applications submitted by us. Your involvement is encouraged.

You should know that:

You may obtain our current CRA Statement for this community in this office. [Current CRA Statements for other communities served by us are available at our head office, located at (address).]

You may send signed, written comments about our CRA Statement[s] or our performance in helping to meet community credit needs to (title and address of State member bank official) and to Community Reinvestment Officer, Federal Reserve Bank of (address). Your letter, together with any response by us, may be made public.

You may look at a file of all signed, written comments received by us within the past 2 years, any responses we have made to the comments, and all CRA Statements in effect during the past 2 years at our office located at (address). [You also may look at the file about this community at (name and address of designated office).]

You may ask to look at any comments received by the Federal Reserve Bank of

In connection with its examination of a State member bank, the Board shall assess the record of performance of the bank in helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the bank. The Board will review the bank's CRA Statement(s) and any signed, written comments retained by the State

member bank or the Federal Reserve Bank. In addition, the Board will consider the following factors in assessing a bank's record of performance:

(a) Activities conducted by the State member bank to ascertain the credit needs of its community, including the extent of the bank's efforts to communicate with members of its community regarding the credit services being provided by the bank;

(b) The extent of the State member bank's marketing and special credit-related programs to make members of the community aware of the credit services offered by the bank;

(c) The extent of participation by the State member bank's board of directors in formulating the bank's policies and reviewing its performance with respect to the purposes of the Community Reinvestment Act;

(d) Any practices intended to discourage applications for types of credit set forth in the State member bank's CRA Statement(s);

(e) The geographic distribution of the State member bank's credit extensions, credit applications, and credit denials;

(f) Evidence of prohibited discriminatory or other illegal credit practices;

(g) The State member bank's record of opening and closing offices and providing services at offices;

(h) The State member bank's participation, including investments, in local community development and redevelopment projects or programs;

(i) The State member bank's origination of residential mortgage loans, housing rehabilitation loans, home improvement loans, and small business or small farm loans within its community, or the purchase of such loans originated in its community;

(j) The State member bank's participation in governmentally-insured, guaranteed, or subsidized loan programs for housing, small businesses or small farms;

(k) The State member bank's ability to meet various community credit needs based on its financial condition and size, and legal impediments, local economic conditions and other factors; and

(1) Other factors that, in the Board's judgment, reasonably bear upon the extent to which a State member bank is helping to meet the credit needs of its entire community.

Effect on Applications. In considering any application For membership in the Federal ve System where membership 1 confer Federal deposit insuron a bank,

By a State member bank for the lishment of a domestic branch or - facility that would be authorLo receive deposits,

By a State member bank for the ation of a domestic branch,

For merger, consolidation, acquin of assets, or assumption of liabilif the acquiring, assuming, or reng bank is to a State member

To become a bank holding com7, and

By a bank holding company to ire ownership or control of shares ssets of a bank, or to merge or condate with any other bank holding pany,

Board will take into account, ong other factors it considers, the ord of performance in meeting the dit needs of its entire community of h applicant bank, each subsidiary k of an applicant bank holding pany, and each proposed subsidibank of an applicant under section of the Bank Holding Company Act U.S.C. 1842) that has an officer, ditor, employee, or significant stocklder associated with the applicant. ose records of performance may be e basis for denying the application. b) In the case of each application r membership that would confer deral deposit insurance, each applition by a State member bank, and ch application by a bank holding mpany with a State bank subsidiary, e Board will consider any views exessed by the respective State bank pervisors as to whether the Statehartered banks involved have been elping to meet the credit needs of heir entire communities, including w- and moderate-income neighboroods, consistent with the safe and ound operation of those banks.

(c) At the request of an applicant, he Board will include in its considertion of an application the record of >erformance of nonbanking subsidiares of bank holding companies in help

ing to meet the credit needs of the communities served by affiliated applicant banks or by subsidiary and proposed subsidiary banks of applicants under section 3 of the Bank Holding Company Act (12 U.S.C. 1842).

(d) At the time an application for membership that would confer Federal deposit insurance is made, the proposed State member bank shall submit to the Board a proposed CRA Statement conforming to the requirements of § 228.4.

§ 228.100 Applicability of the Community Reinvestment Act to certain special purpose banks.

In response to its proposed Regulation BB to implement the Community Reinvestment Act ("CRA") (12 U.S.C. 2901-05), the Board received several inquiries from institutions that, although they are chartered as banks, do not perform commercial or retail banking services. These institutions serve solely as correspondent banks, or as trust companies, or as clearing agents, and they do not extend credit to the public for their own account. The Board concludes that the CRA is not intended to cover these institutions.

It is the purpose of the CRA to require the Board to encourage banks to meet the credit needs of their local communities. To this end, the Board must assess banks' records of performance and take those records into account in acting on certain applications affecting the banks. The Board believes that these provisions were intended to cover all banks that are in the business of extending credit to the public including both "wholesale" and "retail" banks. The lending activities of these banks affect the economic health of the communities in which they are chartered. However, the Board believes it would be pointless to encourage or to assess the creditgranting record of institutions that are not organized to grant credit to the public in the ordinary course of business, other than as an incident to their specialized operations.

Accordingly the term "State member bank" as used in the Board's Regulation BB (12 CFR Part 228) does not in

clude banks that engage solely in correspondent banking business, trust company business, or acting as a clearing agent.

PART 245-LOAN GUARANTEES FOR DEFENSE PRODUCTION

Sec.

245.1 Authority, purpose, and scope. 245.2 Processing of loan guarantee applications.

245.3 Federal Reserve Bank fees and charges.

245.4 Maximum rate of interest, guarantee fees, commitment fees, and prepayment penalties.

AUTHORITY: Sec. 302(c), E.O. 10480 (3 CFR 1949-53 Comp., p. 962), implementing sec. 301, Defense Production Act of 1950 (50 App. U.S.C. 2091).

SOURCE: Regulation V, 44 FR 10383, Feb. 20, 1979, unless otherwise noted. Redesignated at 45 FR 44574, July 1, 1980.

§ 245.1 Authority, purpose, and scope.

(a) Authority. This part comprises the regulations of the Board of Governors of the Federal Reserve System (referred to in this part as the "Board") issued pursuant to Executive Order No. 10480 (3 CFR 1949-53 Comp., p. 962; reprinted as amended following 50 App. U.S.C. 2153 (1970)) (referred to in this part as the "Order"), implementing the Defense Production Act of 1950 (50 App. U.S.C. 2061 et seq. (1970)) (referred to in this part as the "Act").

(b) Purpose and scope. The purpose of the Act, the Order and this part is to facilitate the financing of contract or other operations deemed necessary to national defense production. This part applies to private financing institutions, located in the United States or in any of its Territories or possessions, that make loans for defense production that are guaranteed by the Federal departments or agencies designated by the Act of Order* (Commonly referred to as "V-loans”).

"The names of the Federal departments or agencies may be obtained from any Federal Reserve Bank.

§ 245.2 Processing of loan guarantee applications.

(a) Submission of applications. Any private financing institution may submit to the Federal Reserve Bank of its District an application for a guarantee of a loan to a borrower determined to be eligible in accordance with the provisions of paragraph (b) of this section. The application form is available through the Federal Reserve Bank.

(b) Determination of eligibility of borrower. To be eligible for a V-loan, a borrower must be seeking financing for a contract, subcontract, or other operation deemed by the appropriate guaranteeing Federal department or agency to be necessary to expedite production and deliveries or services under a Government contract for the procurement of materials or the performance of services for the national defense. A determination that the borrower is eligible shall be made by the guaranteeing department or agency on the basis of information contained in the loan guarantee application and any further information that it needs. No loan shall be guaranteed until that determination is made.

(c) Lender's rates and fees. No application for a loan guarantee shall be considered where the loan agreement is inconsistent with the rate of interest, guarantee fees, commitment fees, and prepayment penalties prescribed by the Board in § 245.4 (the Supplement).

(d) Consideration of applications. Each application by a financing institution shall be subject to approval by the guaranteeing department or agency or, to the extent that the department or agency prescribes, by the Federal Reserve Bank to which the application is submitted.

(1) If a guaranteeing department or agency is to decide the application, the Federal Reserve Bank shall make a recommendation for action on the application before the department or agency acts. The Federal Reserve Bank shall transmit the application and its recommendation, together] with all necessary supporting information, through the Board to that department or agency. If the department

y approves the application nsmits its authorization the Board on the Board's form, the Federal Reserve ting as fiscal agent of the ates on behalf of the departagency, shall execute and deguarantee (Board's standard Guarantee Agreement" form) pplicant in accordance with s of the authorization.

■ Federal Reserve Bank is to he application, it shall do so submitting the application to aranteeing department or or prior approval; but the ap

shall be subject first to the ent's or agency's determinahe borrower's eligibility. If the Reserve Bank approves the on, it shall execute and delivguarantee (Board's standard Guarantee Agreement" form) applicant and promptly notify artment or agency.

sis of Federal Reserve Bank deIn making a recommendation ing an application as described graph (d) of this section, a Fed-eserve Bank shall consider T the financing arrangement the guaranteeing department cy the best available protection possible financial loss consistth obtaining national defense tion expeditiously.

ederal Reserve Bank liability. In ing for or making any guaranbehalf of any guaranteeing deent or agency, no Federal ReBank shall have any responsibilaccountability except as fiscal

Other forms and procedures. time to time the Board, after ting guaranteeing departments ncies, may prescribe other forms rocedures related to the V-loan m. These forms and procedural are to be made available through ederal Reserve Banks.

Federal Reserve Bank fees and arges.

h Federal Reserve Bank shall be bursed by each guaranteeing denent or agency in the usual her for all expenses and losses ined by the Reserve Bank in acting

as agent on behalf of the department or agency. Regardless of any other provision of law, such expenses shall include attorneys' fees and expenses of litigation. If a Federal Reserve Bank advances its own funds to purchase a guaranteed portion of a loan, when authorized to do so as fiscal agent by the guaranteeing department or agency, it shall charge interest on its advances at the current regular discount rate.

§ 245.4 Maximum rate of interest, guarantee fees, commitment fees, and prepayment penalties.

The Board of Governors of the Federal Reserve System prescribes the following charges for loans guaranteed pursuant to the Defense Production Act of 1950 (“V-loans”):

(a) Maximum rate of interest. The maximum rate of interest rate of interest that a financing institution may charge a borrower for a V-loan is the rate that institution currently charges its most creditworthy business customers for loans of comparable maturity, unless the guaranteeing department or ageny determines that the particular loan at a higher rate of interest is necessary for the purposes of the Defense Production Act of 1950.

(b) Guarantee fees. The schedule of fees for guaranteeing V-loans is as follows:

applied consistently with respect to all applications received while the policy is in effect.

(c) Commitment fees. Any commitment fee charged a borrower for a Vloan shall not exceed 1⁄2 of 1 per cent per annum, based on the average daily unused balance of the maximum principal amount of the loan. That fee may not begin to accrue prior to the date on which the committed funds are first available to the borrower according to the terms of the loan agreement or other similar financing arrangement. In any such case, the financing institution shall pay to the guaranteeing department or agency, a percentage of the commitment fee (1) based on the guaranteed portion of the loan, and (2) equal to the percentage of the interest on the loan that is payable as a guarantee fee by the financing institution.

(d) Prepayment penalties. (1) In the case of a V-loan made primarily for working captial purposes, a financing institution may not charge a penalty for prepayment of the loan but may recover out-of-pocket expenses.

(2) In the case of a V-loan made for the purpose of financing facilities expansion, provision for a prepayment penalty may be made in the loan agreement if all of the following conditions are met:

(i) The loan has a maturity of 5 years or more;

(ii) The prepayment penalty shall not exceed the rate of interest to be paid by the borrower according to the terms of the loan;

(iii) Provision is made for a graduated decrease in the prepayment penalty as the loan approaches maturity; and (iv) The loan agreement explicitly provides that the prepayment penalty shall not be applicable in the event the loan is refinanced by or consolidated with another loan that is made or guaranteed by the federal government or any of its agencies.

250.101 Necessity for Board approval of stock dividend by State member bank. 250.102 Payment of dividends; effect of net losses.

250.103 Payment of dividends exceeding net profits to date of declaration. 250.104 Dividends of State member banks-Meaning of "net profits." 250.120 Underwriting bonds payable from proceeds of State sales taxes. 250.121 Application of investment securities regulation to member State banks. 250.122 Underwriting of public Authority bonds payable from rents under lease with governmental entity having general taxing powers.

250.123 Underwriting of notes payable from proceeds of subsequent sale of general obligation bonds.

250.140 Member bank acquisition of stock of another bank.

250.141 Member bank purchase of stock of "operations subsidiaries."

250.142 Meaning of "obligor or maker” in determining limitation on securities investments by member State banks. 250.143 Member bank purchase of stock of foreign operations subsidiaries.

250.160 Federal funds transactions. 250.161 Capital notes and debentures as "capital," "capital stock,” or “surplus." 250.162 Undivided profits as "capital stock and surplus".

250.163 Inapplicability of amount limitations to "ineligible acceptances." 250.164 Bankers' acceptances.

250.165 Bankers' acceptances: definition of participations.

250.180 Reports of changes in control of management.

250.181 Reports of change in control of

bank management incident to a merger. 250.182 Terms defining competitive effects of proposed mergers.

250.200 Investment in bank premises by holding company banks.

250.220 Whether member bank acting as trustee is prohibited by section 20 of the Banking Act of 1933 from acquiring majority of shares of mutual fund. 250.221 Issuance and sale of short-term debt obligations by bank holding companies.

250.240 Applicability of section 23A of the Federal Reserve Act to transactions between a member State bank and its “operations subsidiary".