SB 901 Senate Bill - INTRODUCED

BILL NUMBER: SB 901	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Dunn

                        FEBRUARY 21, 2003

   An act to add Division 21 (commencing with Section 60000) to the
Financial Code, relating to community reinvestment.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 901, as introduced, Dunn.  Community reinvestment.
   Existing law provides for the regulation of various financial
institutions by the Commissioner of Financial Institutions, including
banks and credit unions.  Existing federal law, the Community
Reinvestment Act, encourages certain depository institutions to help
meet the credit needs of the communities in which they operate,
including low- and moderate-income neighborhoods, consistent with
safe and sound banking operations.  The act requires that those
depository institutions' records be evaluated periodically in order
to help meet the credit needs of the entire community in which they
operate.
   This bill would enact the California Community Reinvestment Act
that would require the commissioner to evaluate and rate an
institution's lending performance pursuant to certain standards.  The
bill would require these institutions, including state banks and
credit unions, to make information in their public files available to
the public for inspection upon request and at no cost.  The bill
would also require these institutions to provide specific notices in
their main offices and branch offices.  The bill would enact various
related provisions.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Division 21 (commencing with Section 60000) is added to
the Financial Code, to read:

      DIVISION 21.  COMMUNITY REINVESTMENT

      CHAPTER 1.  GENERAL PROVISIONS

   60000.  This division shall be known and may be cited as the
California Community Reinvestment Act.
   60001.  It is the intent of the Legislature to establish criteria
for the Commissioner of Financial Institutions to assess a financial
institution's record of helping to meet the credit needs of the
entire community it serves, including low- and moderate-income
neighborhoods, consistent with the safe and sound operation of the
institution.
   60002.  The provisions of this division shall apply to all
institutions, as defined in subdivision (p) of Section 60003.
   60003.  For the purposes of this division, the following
definitions apply:
   (a) "Affiliate" means any company that controls, is controlled by,
or is under common control with another company.
   (b) "Control" has the meaning given to that term in Section 1841
(a)(2) of Title 12 of the United States Code, and a company is under
common control with another company if both companies are directly or
indirectly controlled by the same company.
   (c) "Area median income" means one of the following:
   (1) The median family income for the MSA, if a person or geography
is located in an MSA.
   (2) The statewide nonmetropolitan median family income, if a
person or geography is located outside an MSA.
   (d) "Automated teller machine" (ATM), means an automated,
unstaffed banking facility owned or operated by, or operated
exclusively for, the institution at which deposits are received, cash
dispersed, or money lent.
   (e) "Branch" means a staffed banking facility established or
acquired as a branch under California law.
   (f) "CMSA" means a consolidated metropolitan statistical area as
defined by the Commissioner of Financial Institutions.
   (g) "Commissioner" means the Commissioner of Financial
Institutions.
   (h) "Community development" means any of the following:
   (1) Affordable housing, including multifamily rental housing, for
low-and moderate-income individuals.
   (2) Community services targeted to low- and moderate-income
individuals.
   (3) Activities that promote economic development by financing
businesses or farms that meet the size eligibility standards of the
Small Business Administration's Development Company or Small Business
Investment Company programs (13 CFR 121.301) or have gross annual
revenues of one million dollars ($1,000,000) or less.
   (4) Activities that revitalize or stabilize the fishing industry.

   (5) Activities that revitalize or stabilize low- and
moderate-income geographies.
   (i) "Community development loan" means a loan that meets the
following:
   (1) The loan has as its primary purpose community development.
   (2) The loan, except in the case of a wholesale or limited purpose
institution, has not been reported or collected by the institution
or an affiliate for consideration in the institution's assessment as
a home mortgage, small business, small farm, or consumer loan, unless
it is a multifamily dwelling loan, as described in Appendix A to 12
CFR 203, the Board of Governors of the Federal Reserve System's
implementing regulations for the federal Home Mortgage Disclosure Act
(12 U.S.C. Sec. 2801), and the loan benefits the institution's
assessment areas or a broader statewide or regional area that
includes the institution's assessment areas.
   (j) "Community development service" means a service that meets the
following:
   (1) It has as its primary purpose community development.
   (2) It is related to the provision of financial services.
   (3) It has not been considered in the evaluation of the
institution's retail banking services under subdivision (e) of
Section 60019.
   (k) "Consumer loan" means a loan to one or more individuals for
household, family, or other personal expenditures.  A consumer loan
does not include a home mortgage, small business, or small farm loan.
  Consumer loans include the following categories of loans:
   (1) A motor vehicle loan that is a consumer loan extended for the
purchase of, and secured by, a motor vehicle.
   (2) A credit card loan that is a line of credit for household,
family, or other personal expenditures that is accessed by a borrower'
s use of a "credit card," as this term is defined in subdivision (a)
of Section 1747.02 of the Civil Code.
   (3) A home equity loan that is a consumer loan secured by a
residence of the borrower.
   (5) Other secured consumer loans that are secured consumer loans
that are not included in one of the other categories of consumer
loans.
   (6) Other unsecured consumer loans that are unsecured consumer
loans that are not included in one of the other categories of
consumer loans.
   (l) "Credit union" has the same meaning set forth in Section
14002.
   (m) "Geography" means a census tract or a block numbering area
delineated by the United States Bureau of the Census in the most
recent decennial census.
   (n) "Home mortgage loan" means a home improvement loan or a home
purchase loan as defined in 12 CFR 203.2, the regulations
implementing the federal Home Mortgage Disclosure Act.
   (o) "Income level" includes the following:
   (1) Low income, which is an individual income that is less than 50
percent of the area median income, or a median family income that is
less than 50 percent, in the case of a geography.
   (2) Moderate income, which is an individual income that is at
least 50 percent and less than 80 percent of the area median income,
or a median family income that is at least 50 percent and less than
80 percent, in the case of a geography.
   (3) Middle income, which is an individual income that is at least
80 percent and less than 120 percent of the area median income, or a
median family income that is at least 80 percent and less than 120
percent, in the case of a geography.
   (4) Upper income, which is an individual income that is 120
percent or more of the area median income, or a median family income
that is 120 percent or more, in the case of a geography.
   (p) "Institution" means a bank or credit union chartered under the
laws of the this state or an out-of-state bank, an out-of-state
national bank or a foreign bank with a branch office in this state,
except that this definition shall not include a credit union where
otherwise specified under this division.
   (q) "Limited purpose institution" means an institution that offers
only a narrow product line, such as credit card or motor vehicle
loans, to a regional or broader market and for which a designation as
a limited purpose institution is in effect, in accordance with
subdivision (b) of Section 60014.
   (r) "Loan location" means the following:
   (1) A consumer loan is located in the geography where the borrower
resides.
   (2) A home mortgage loan is located in the geography where the
property to which the loan relates is located.
   (3) A small business or small farm loan is located in the
geography where the main business facility or farm is located or
where the loan proceeds otherwise will be applied, as indicated by
the borrower.
   (s) "Loan production office" means a staffed facility, other than
a branch, that is open to the public and that provides
lending-related services, such as loan information and applications.

   (t) "MSA" means a metropolitan statistical area or a primary
metropolitan statistical area as defined by the commissioner.
   (u) "Qualified investment" means a lawful investment, deposit,
membership share, or grant that has as its primary purpose community
development, and lawful investments in the following:
   (1) Corporations for the purpose of micro-lending in the area of
small business, small farms, and the fishing industry.
   (2) Corporations for the purpose of providing technical assistance
to nonprofit housing corporations, small businesses and farms for
the purpose of establishing creditworthiness.
   (3) Contributions to any private nonprofit organization organized
for improving the social and economic conditions, such as community
development programs, small business technical assistance, and
educational institutions, in communities in where the institution has
an office.
   (4) Contributions for the purpose of relieving suffering or
distress resulting from disaster or other calamity, such as hurricane
or flood, occurring in any part of the state.
   (v) "Small institution" means an institution that, as of December
31 of either of the prior two calendar years, had total assets of
less than $250 million and was independent or an affiliate of a
holding company that, as of December 31 of either of the prior two
calendar years, had total assets of less than $1 billion.
   (w) "Small business loan" means a loan included in loans to small
businesses.
   (x) "Small farm loan" means a loan included in loans to small
farms.
   (y) "Wholesale institution" means an institution that is not in
the business of extending home mortgage, small business, small farm,
or consumer loans to retail customers, and for which a designation as
a wholesale institution is in effect, in accordance with subdivision
(b) of Section 60019.

      CHAPTER 2.  INSTITUTION EVALUATION

   60010.  The commissioner shall assess the community reinvestment
performance of an institution in an examination as follows:
   (a) The commissioner shall apply the lending, investment, and
service tests, set forth in Sections 60011 to 60018, inclusive, in
evaluating the performance of an institution, except as provided in
subdivisions (b), (c), (d), and (e).
   (b) The commissioner shall apply the community development test
for a wholesale or limited purpose institution, as provided in
Section 60019, except as provided in subdivision (d).
   (c) The commissioner shall apply the small institution performance
standards set forth in Section 60020 in evaluating the performance
of a small institution or an institution that was a small institution
during the prior calendar year, unless the institution elects to be
assessed as provided in subdivisions (a), (b), or (d).  However, an
institution may elect to be assessed as provided in subdivision (a)
only if it collects and reports the data required for other
institutions under Sections 60027 and 60028.
   (d) The commissioner shall evaluate the performance of an
institution under a strategic plan if the institution submits, and
the commissioner approves, a strategic plan as provided in Sections
60021 and 60022.
   (e) The commissioner shall apply the lending and service tests, as
provided in Sections 60013 to 60016, inclusive, in evaluating the
performance of a credit union.  The investment test shall not apply
to credit unions. However, a credit union that achieves at least a
"satisfactory" rating under the lending and service tests may warrant
consideration for an overall rating of "high satisfactory" or
"outstanding" depending on the credit union's performance in making
qualified investments and community development loans to the extent
authorized under law, in accordance with Chapter 3 (commencing with
Section 60040).
   60011.  The commissioner shall apply the tests and standards in
Section 60010 and also consider whether to approve a proposed
strategic plan in the context of the following:
   (a) Demographic data on median income levels, distribution of
household income, nature of housing stock, housing costs, and other
relevant data pertaining to an institution's assessment areas.
   (b) Any information about lending, investment, and service
opportunities in the institution's assessment areas maintained by the
institution or obtained from community organizations, state, local,
and tribal governments, economic development agencies, or other
sources.
   (c) The institution's product offerings and business strategy as
determined from data provided by the institution.
   (d) Institutional capacity and constraints, including the size and
financial condition of the institution, the economic climate
(national, regional, and local), safety and soundness limitations,
and any other factors that significantly affect the institution's
ability to provide lending, investments, or services in its
assessment areas.
   (e) The institution's past performance and the performance of
similarly situated lenders.
   (f) The institution's public file, as described in Section 60017
and any written comments about the institution's community
reinvestment performance submitted to the institution or the
commissioner.
   (g) The credit union's defined membership by-law provisions and
the lending and investment authority restrictions.
   (h) Any other information deemed relevant by the commissioner.
   60012.  (a) The commissioner shall assign to an institution one of
the following five ratings pursuant to Section 60024 and Chapter 3
(commencing with Section 60040):  "outstanding," "high satisfactory,"
"satisfactory," "needs to improve," or "substantial noncompliance."
The rating assigned by the commissioner shall reflect the
institution's record of helping to meet the credit needs of its
entire community, including low- and moderate-income neighborhoods,
consistent with the safe and sound operation of the institution.
   (b) This division shall not be deemed to require an institution to
make loans or investments or to provide services that are
inconsistent with safe and sound operations.
   60013.  (a) The lending test shall evaluate an institution's
record of helping to meet the credit needs of its assessment areas
through its lending activities by considering an institution's home
mortgage, small business, small farm, and community development
lending.  If consumer lending constitutes a substantial majority of
an institution's business, the commissioner shall evaluate the
institution's consumer lending in one or more of the following
categories:  motor vehicle, credit card, home equity, other secured,
and other unsecured loans.  In addition, at an institution's option,
the commissioner shall evaluate one or more categories of consumer
lending, if the institution has collected and maintained, as required
in Section 60028, the data for each category that the institution
elects to have the commissioner evaluate.
   (b) The commissioner shall consider originations and purchases of
loans.  The commissioner shall also consider any other loan data the
institution may choose to provide, including data on loans
outstanding, commitments and letters of credit.
   (c) An institution may ask the commissioner to consider loans
originated or purchased by consortia in which the institution
participates or by third parties in which the institution has
invested only if the loans meet the definition of community
development loans and only in accordance with Section 60016.  The
commissioner shall not consider these loans under any criterion of
the lending test except the community development lending criterion.

   60014.  The commissioner evaluates an institution's lending
performance pursuant to the following criteria:
   (a) The number and amount of the institution's home mortgage,
small business, small farm, and consumer loans, if applicable, in the
institution's assessment areas.
   (b) The geographic distribution of the institution's home
mortgage, small business, small farm, and consumer loans, if
applicable, based on the loan location, including:
   (1) The proportion of the institution's lending in the institution'
s assessment areas.
   (2) The dispersion of lending in the institution's assessment
areas.
   (3) The number and amount of loans in low-, moderate-, middle-,
and upper-income geographies in the institution's assessment areas.
   (c) The distribution, particularly in the institution's assessment
areas, of the institution's home mortgage, small business, small
farm, and consumer loans, if applicable, based on borrower
characteristics, including the number and amount of the following:
   (1) Home mortgage loans to low-, moderate-, middle-, and
upper-income individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in affordable housing
in their neighborhoods.
   (2) Small business and small farm loans to businesses and farms
with gross annual revenues of one million dollars ($1,000,000) or
less.
   (3) Small business and small farm loans by loan amount at
origination.
   (4) Consumer loans, if applicable, to low-, moderate-, middle-,
and upper-income individuals.
   (d) The institution's community development lending, including the
number and amount of community development loans, and their
complexity and innovativeness.
   (e) The institution's use of innovative or flexible lending
practices in a safe and sound manner to address the credit needs of
low- and moderate-income individuals or geographies.
   (f) The institution's performance relative to fair lending
policies and practices pursuant to written policies and directives
issued by the commissioner.
   (g) The institution's number and amount of loans that show an
undue concentration and a systematic pattern of lending resulting in
the loss of affordable housing units.
   60015.  (a) At an institution's option, the commissioner shall
consider loans by an affiliate of the institution, if the institution
provides data on the affiliate's loans pursuant to Sections 60027
and 60028.
   (b) The commissioner shall consider affiliate lending subject to
the following constraints:
   (1) No affiliate may claim a loan origination or loan purchase if
another institution claims the same loan origination or purchase.
   (2) If an institution elects to have the commissioner consider
loans within a particular lending category made by one or more of the
institution's affiliates in a particular assessment area, the
institution shall elect to have the commissioner consider all the
loans within that lending category in that particular assessment area
made by all of the institution's affiliates.
   (c) The commissioner shall not consider affiliate lending in
assessing an institution's performance under Section 60014.
   60016.  Community development loans originated or purchased by a
consortium in which the institution participates or by a third party
in which the institution has invested will be considered, at the
institution's option, if the institution reports the data pertaining
to these loans under Section 60027 and 60028.  The community
development loans may be allocated among participants or investors,
as they choose, for purposes of the lending test, except that no
participant or investor may do the following:
   (a) Claim a loan origination or loan purchase if another
participant or investor claims the same loan origination or purchase.

   (b) Claim loans accounting for more than its percentage share,
based on the level of its participation or investment, of the total
loans originated by the consortium or third party.
   60017.  (a) The investment test shall evaluate an institution's
record of helping to meet the credit needs of its assessment areas
through qualified investments that benefit its assessment areas or a
broader statewide or regional area that includes the institution's
assessment areas.  A credit union shall not be evaluated under the
investment test except as provided under Chapter 3 (commencing with
Section 60040).
   (b) Activities considered under the lending or service tests may
not be considered under the investment test.
   (c) At an institution's option, the commissioner shall consider,
in its assessment of an institution's investment performance, a
qualified investment made by an affiliate of the institution, if the
qualified investment is not claimed by any other institution.
   (d) Donating, selling on favorable terms, or making available on a
rent-free basis a branch of the institution that is located in a
predominantly minority neighborhood to a minority depository
institution or women's depository institution, as these terms are
defined in 12 U.S.C. 2907(b), shall be considered as a qualified
investment.
   (e) The commissioner shall evaluate the investment performance of
an institution pursuant to the following criteria:
   (1) The dollar amount of qualified investments.
   (2) The innovativeness or complexity of qualified investments.
   (3) The responsiveness of qualified investments to credit and
community development needs.
   (4) The degree to which the qualified investments assist existing
low-and moderate-income residents to be able to remain in affordable
housing in their neighborhoods.
   (4) The degree to which the qualified investments are not
routinely provided by private investors.
   (e) The commissioner shall rate an institution's investment
performance as provided in Chapter 3 (commencing with Section 60040).

   60018.  (a) The service test evaluates an institution's record of
helping to meet the credit needs of its assessment areas by analyzing
both the availability and effectiveness of an institution's systems
for delivering retail banking services and the extent and
innovativeness of its community development services.
   (b) Community development services shall benefit an institution's
assessment areas or a broader statewide or regional area that
includes the institution's assessment areas.
   (c) At an institution's option, the commissioner shall consider,
in its assessment of an institution's service performance, a
community development service provided by an affiliate of the
institution, if the community development service is not claimed by
any other institution.
   (d) The commissioner shall evaluate the availability and
effectiveness of an institution's systems for delivering retail
banking services, pursuant to the following criteria:
   (1) The current distribution of the institution's branches among
low-, moderate-, middle-, and upper-income geographies.
   (2) In the context of its current distribution of the institution'
s branches, the institution's record of opening and closing branches,
particularly branches located in low- and moderate-income
geographies or primarily serving low- and moderate-income
individuals.
   (3) The availability and effectiveness of alternative systems for
delivering retail banking services such as ATMs, ATMs not owned or
operated by or exclusively for the institution, banking by telephone
or computer, loan production offices, and bank-at-work or
bank-by-mail programs, in low- and moderate-income geographies and to
low- and moderate-income individuals.
   (4) The range of services provided in low-, moderate-, middle-,
and upper-income geographies and the degree to which the services are
tailored to meet the needs of those geographies.
   (e) The commissioner shall evaluate community development services
pursuant to the following criteria:
   (1) The extent to which the institution provides community
development services.
   (2) The innovativeness and responsiveness of community development
services.
   (f) Service performance rating.  The commissioner rates an
institution's service performance as provided in Chapter 4
(commencing with Section 60040).
   60019.  (a) The commissioner shall assess a wholesale or limited
purpose institution's record of helping to meet the credit needs of
its assessment areas under the community development test through its
community development lending, qualified investments, or community
development services.
   (b) In order to receive a designation as a wholesale or limited
purpose institution, an institution shall file a request, in writing,
with the commissioner, at least three months prior to the proposed
effective date of the designation.  If the commissioner approves the
designation, it remains in effect until the institution requests
revocation of the designation or until one year after the
commissioner notifies the institution that the commissioner has
revoked the designation on the commissioner's own initiative.
   (c) The commissioner evaluates the community development
performance of a wholesale or limited purpose institution pursuant to
the following criteria:
   (1) The number and amount of community development loans,
including originations and purchases of loans and other community
development loan data provided by the institution, such as data on
loans outstanding, commitments, and letters of credit, qualified
investments, or community development services.
   (2) The use of innovative or complex qualified investments,
community development loans, or community development services and
the extent to which the investments are not routinely provided by
private investors.
   (3) The institution's responsiveness to credit and community
development needs.
   (d) At an institution's option, the commissioner shall consider in
its community development performance assessment:
   (a) Qualified investments or community development services
provided by an affiliate of the institution, if the investments or
services are not claimed by any other institution.
   (b) Community development lending by affiliates, consortia, and
third parties, subject to the requirements and limitations in
Sections 60015 and 60016.
   (e) (1) The commissioner shall consider all qualified investments,
community development loans, and community development services that
benefit areas within the institution's assessment areas or a broader
statewide or regional area that includes the institution's
assessment areas.
   (2) The commissioner shall consider the qualified investments,
community development loans, and community development services that
benefit areas outside the institution's assessment areas, if the
institution has adequately addressed the needs of its assessment
areas.
   (f) The commissioner rates an institution's community development
performance as provided in Chapter 3 (commencing with Section 60040).

   60020.  (a) The commissioner shall evaluate the record of a small
institution, or an institution that was a small institution during
the prior calendar year, to determine if it is helping to meet the
credit needs of its assessment areas, pursuant to the following
criteria:
   (1) The institution's loan-to-deposit ratio, adjusted for seasonal
variation and, as appropriate, other lending-related activities,
such as loan originations for sale to the secondary markets,
community development loans, or qualified investments.
   (2) The percentage of loans and, as appropriate, other
lending-related activities located in the institution's assessment
areas.
   (3) The institution's record of lending to and, as appropriate,
engaging in other lending-related activities for borrowers of
                                     different income levels and
businesses and farms of different sizes.
   (4) The geographic distribution of the institution's loans,
provided, however that a credit union shall be evaluated in the
context of its relevant membership by-law provisions.
   (5) The institution's record of taking action, if warranted, in
response to written complaints about its performance in helping to
meet credit needs in its assessment areas and its performance with
regard to fair lending policies and practices.
   (b) The commissioner shall rate the performance of an institution
evaluated under this section pursuant to Chapter 3 (commencing with
Section 60040).
   60021.  (a) The commissioner shall assess an institution's record
of helping to meet the credit needs of its assessment areas under a
strategic plan if:
   (1) The institution has submitted the plan to the commissioner as
provided for in this section.
   (2) The commissioner has approved the plan.
   (3) The plan is in effect.
   (4) The institution has been operating under an approved plan for
at least one year.
   (b) The commissioner's approval of a plan shall not affect the
institution's obligation, if any, to report data as required by
Sections 6027 and 6028.
   60022.  (a) A plan may have a term of no more than five years, and
any multiyear plan must include annual interim measurable goals
under which the commissioner shall evaluate the institution's
performance.
   (b) An institution with more than one assessment area may prepare
a single plan for all of its assessment areas or one or more plans
for one or more of its assessment areas.
   (c) Affiliated institutions may prepare a joint plan if the plan
provides measurable goals for each institution.  Activities may be
allocated among institutions at the institutions' option, provided
that the same activities are not considered for more than one
institution.
   (d) Before submitting a plan to the commissioner for approval, an
institution shall do the following:
   (1) Informally seek suggestions from members of the public in its
assessment areas covered by the plan while developing the plan.
   (2) Once the institution has developed a plan, formally solicit
public comment on the plan for at least 30 days by publishing notice
in at least one newspaper of general circulation in each assessment
area covered by the plan.
   (3) During the period of formal public comment, make copies of the
plan available for review by the public at no cost at all offices of
the institution in any assessment area covered by the plan and
provide copies of the plan upon request for a reasonable fee to cover
copying and mailing, if applicable.
   (g) The institution shall submit its plan to the commissioner at
least three months prior to the proposed effective date of the plan.
The institution shall also submit with its plan a description of its
informal efforts to seek suggestions from members of the public, any
written public comment received, and, if the plan was revised in
light of the comment received, the initial plan as released for
public comment.
   (h) An institution shall specify in its plan measurable goals for
helping to meet the credit needs of each assessment area covered by
the plan, particularly the needs of low- and moderate-income
geographies and low- and moderate-income individuals, through
lending, investment, and services, as appropriate.
   (i) An institution shall address in its plan all three performance
categories and, unless the institution has been designated as a
wholesale or limited purpose institution, shall emphasize lending and
lending-related activities.  Nevertheless, a different emphasis,
including a focus on one or more performance categories, may be
appropriate if responsive to the characteristics and credit needs of
its assessment areas, considering public comment and the institution'
s capacity and constraints, product offerings, and business strategy.

   (j) An institution may submit additional information to the
commissioner on a confidential basis which shall not be deemed a
public record or be subject to the public disclosure, but the goals
stated in the plan must be sufficiently specific to enable the public
and the commissioner to judge the merits of the plan.
   (k) An institution shall specify in its plan measurable goals that
constitute "satisfactory" performance.  A plan may specify
measurable goals that constitute "outstanding" performance.  If an
institution submits, and the commissioner approves, both
"satisfactory" and "outstanding" performance goals, the commissioner
will consider the institution eligible for an "outstanding"
performance rating.
   (l) An institution may elect in its plan that, if the institution
fails to meet substantially its plan goals for a satisfactory rating,
the commissioner will evaluate the institution's performance under
the lending, investment, and service tests, the community development
test, or the small institution performance standards, as
appropriate.
   60023.  (a) The commissioner shall act upon a plan within
60-calendar days after the commissioner receives the complete plan
and other material required under Section 60022.  If the commissioner
fails to act within this time period, the plan shall be deemed
approved unless the commissioner extends the review period for good
cause.
   (b) In evaluating the plan's goals, the commissioner shall
consider the public's involvement in formulating the plan, written
public comment on the plan, and any response by the institution to
public comment on the plan.
   (c) The commissioner shall evaluate a plan's measurable goals
using the following criteria, as appropriate:
   (1) The extent and breadth of lending or lending-related
activities, including, as appropriate, the distribution of loans
among different geographies, businesses and farms of different sizes,
and individuals of different income levels, the extent of community
development lending, and the use of innovative or flexible lending
practices to address credit needs.
   (2) The amount and innovativeness, complexity, and responsiveness
of the institution's qualified investments.
   (3) The availability and effectiveness of the institution's
systems for delivering retail banking services and the extent and
innovativeness of the institution's community development services.
   (d) During the term of a plan, an institution may request the
commissioner to approve an amendment to the plan on grounds that
there has been a material change in circumstances.  The institution
shall develop an amendment to a previously approved plan in
accordance with the public participation requirements of subdivision
(d) of Section 60022.
   (e) The commissioner approves the goals and assesses performance
under a plan as provided for in Chapter 3 (commencing with Section
60040).
   60024.  (a) Subject to subdivisions (a) and (b), the commissioner
shall assign to an institution a rating of "outstanding," "high
satisfactory," "satisfactory," "needs to improve," or "substantial
noncompliance" based on the institution's performance under the
lending, investment and service tests, the community development
test, the small institution performance standards, or an approved
strategic plan, as applicable.
   (b) The commissioner shall assign a rating for an institution
assessed under the lending, investment, and service tests in
accordance with the following principles:
   (1) An institution that receives an "outstanding" rating on the
lending test receives an assigned rating of at least "satisfactory."
   (2) An institution that receives an "outstanding" rating on both
the service test and the investment test and a rating of at least
"high satisfactory" on the lending test receives an assigned rating
of "outstanding."
   (3) No institution may receive an assigned rating of "satisfactory"
or higher unless it receives a rating of at least "satisfactory" on
the lending test.
   (4) An institution that receives a "satisfactory" rating on the
lending test and either the service or investment test, and receives
a rating of "needs to improve" on the third test, receives an
assigned rating of "satisfactory."
   (5) A credit union that receives a "satisfactory" rating on the
lending test and receives a rating of "needs to improve" on the
service test, receives an assigned rating of "satisfactory."
   (c) In determining the effect on an institution's assigned rating,
the commissioner shall consider the nature and extent of the
evidence, the policies and procedures that the institution has in
place to prevent discriminatory or other illegal credit practices,
any corrective action that the institution has taken or has committed
to take, particularly voluntary corrective action resulting from
self-assessment, the institution's compliance with written policies
and directives with regard to fair lending, and other relevant
information.
   60025.  (a) Among other factors, the commissioner shall take into
account the record of performance under the community reinvestment
provisions of this division of each institution submitting
applications for the following:
   (1) Establishment of any branch by all state-chartered
institutions.
   (2) Establishment of Massachusetts branches by out-of-state banks,
out-of-state federal banks, and foreign banks.
   (3) A merger or consolidation with or the acquisition of assets or
assumption of liabilities of any state-chartered institution by a
California bank or bank holding company, including its subsidiaries.

   (4) A merger or consolidation with, or the acquisition of assets
or assumption of, liabilities of a state-chartered institution by an
out-of-state bank, an out-of-state federal bank, or an foreign bank
or bank holding company, including its subsidiaries.
   (5) An automated teller machine.
   (6) A mobile electronic branch.
   (7) Any other approval of the commissioner, provided that there
are no other countervailing financial safety and soundness or other
policy considerations.
   (b) In considering community reinvestment performance in an
application described in subdivision (a), the commissioner shall take
into account any views expressed by interested parties that are
submitted.
   (c) An institution's record of performance may be the basis for
denying or conditioning approval of an application listed in
subdivision (a).
   (d) The commissioner shall establish alternative branch opening
application procedures for institutions that received a rating of
"outstanding" as of their most recent state or federal examination.
These procedures shall include such other standards and procedures as
the commissioner deems appropriate.
   60026.  (a) An institution shall delineate one or more assessment
areas within which the commissioner shall evaluate the institution's
record of helping to meet the credit needs of its community.  The
commissioner shall not evaluate the institution's delineation of its
assessment areas as a separate performance criterion.  However, the
commissioner shall review the delineation for compliance with the
requirements of this section.
   (b) The assessment areas for a wholesale or limited purpose
institution shall consist generally of one or more MSAs, using the
MSA boundaries that were in effect as of January 1 of the calendar
year when the delineation is made, or one or more contiguous
political subdivisions, such as counties, cities, or towns, in which
the institution has its main office, branches, and deposit-taking
ATMs.
   (c) The assessment areas for an institution other than a wholesale
or limited purpose institution or a credit union under subdivision
(h) shall:
   (1) Consist generally of one or more MSAs, using the MSA
boundaries that were in effect as of January 1 of the calendar year
where the delineation is made, or one or more contiguous political
subdivisions, such as counties, cities, or towns.
   (2) Include the geographies where the institution has its main
office, its branches, and its deposit-taking ATMs, as well as the
surrounding geographies in which the institution has originated or
purchased a substantial portion of its loans, including home mortgage
loans, small business and small farm loans, and any other loans the
institution chooses, such as those consumer loans on which the
institution elects to have its performance assessed.
   (d) An institution may adjust the boundaries of its assessment
areas to include only the portion of a political subdivision that it
reasonably can be expected to serve.  An adjustment is particularly
appropriate in the case of an assessment area that otherwise would be
extremely large, of unusual configuration, or divided by significant
geographic barriers.
   (e) Each institution's assessment areas shall meet the following:

   (1) Consist only of whole geographies.
   (2) They shall not reflect illegal discrimination;
   (3) They shall not arbitrarily exclude low- and moderate-income
geographies, taking into account the institution's size and financial
condition.
   (4) They shall not extend substantially beyond a CMSA boundary or
beyond a state boundary unless the assessment area is located in a
multistate MSA.  If an institution serves a geographic area that
extends substantially beyond a state boundary, the institution shall
delineate separate assessment areas for the areas in each state.  If
an institution serves a geographic area that extends substantially
beyond a CMSA boundary, the institution shall delineate separate
assessment areas for the areas inside and outside the CMSA.
   (f) Notwithstanding the requirements of this section, an
institution whose business predominantly consists of serving the
needs of military personnel or their dependents who are not located
within a defined geographic area may delineate its entire deposit
customer base as its assessment area.
   (g) The commissioner shall use the assessment areas delineated by
an institution in its evaluation of the institution's community
reinvestment performance unless the commissioner determines that the
assessment areas do not comply with the requirements of this section.

   (h) Notwithstanding the requirements of this section, a credit
union whose membership by-law provisions are not based on residence
may delineate its membership as its assessment area.
   60027.  (a) Institutions shall comply with all data collection,
reporting and disclosure regulations as promulgated by the
appropriate federal banking agencies.
   (b) Credit unions are exempted from the data collection,
reporting, and disclosure requirements for small business, small
farm, and community development loans; provided, however, if the
credit union, except a credit union that meets the definition of a
small institution, is subject to reporting under the Board of
Governors of the Federal Reserve System's implementing regulations
for the Home Mortgage Disclosure Act (12 CFR 203), it shall report
the location of each home mortgage loan application, origination, or
purchase outside the MSAs in which the credit union has a home or
branch office, or outside any MSA, in accordance with the
requirements of 12 CFR 203.
   60028.  (a) An institution may collect and maintain in machine
readable form, as prescribed by the commissioner, data for consumer
loans originated or purchased by the institution for consideration
under the lending test.  An institution may maintain data for one or
more of the following categories of consumer loans:  motor vehicle,
credit card, home equity, other secured, and other unsecured.  If the
institution maintains data for loans in a certain category, it shall
maintain data for all loans originated or purchased within that
category.  The institution shall maintain the following data
separately for each category, including for each loan:
   (1) A unique number or alpha-numeric symbol that can be used to
identify the relevant loan file.
   (2) The loan amount at origination or purchase.
   (3) The loan location.
   (4) The gross annual income of the borrower that the institution
considered in making its credit decision.
   (b) At its option, an institution may provide other information
concerning its lending performance, including additional loan
distribution data.
   60029.  An institution shall maintain a public file that includes
the following information:
   (a) All written comments received from the public for the current
year and each of the prior two calendar years that specifically
relate to the institution's performance in helping to meet community
credit needs, and any response to the comments by the institution, if
neither the comments nor the responses contain statements that
reflect adversely on the good name or reputation of any persons other
than the institution or publication of which would violate specific
provisions of law.
   (b) A copy of the public section of the institution's most recent
community reinvestment performance evaluation prepared by the
commissioner. The institution shall place this copy in the public
file within 30 business days after its receipt from the commissioner.

   (c) A list of the institution's branches, their street addresses,
and geographies.
   (d) A list of branches opened or closed by the institution during
the current year and each of the prior two calendar years, their
street addresses, and geographies.
   (e) A list of services, including hours of operation, available
loan and deposit products, and transaction fees, generally offered at
the institution's branches and descriptions of material differences
in the availability or cost of services at particular branches, if
any.  At its option, an institution may include information regarding
the availability of alternative systems for delivering retail
banking services (e.g., ATMs, ATMs not owned or operated by or
exclusively for the institution, banking by telephone or computer,
loan production offices, and bank-at-work or bank-by-mail programs).

   (f) A map of each assessment area showing the boundaries of the
area and identifying the geographies contained within the area,
either on the map or in a separate list, provided however, a map of
the assessment area does not need to be maintained if the institution
is a credit union whose membership by-law provisions do not
correspond to a defined geographic area.
   (g) Any other information the institution chooses.
   60030.  (a) An institution, except a small institution or an
institution that was a small institution during the prior calendar
year, shall include in its public file the following information
pertaining to the institution and its affiliates, if applicable, for
each of the prior two calendar years:
   (1) If the institution has elected to have one or more categories
of its consumer loans considered under the lending test, for each of
these categories, the number and amount of loans:
   (A) To low-, moderate-, middle-, and upper-income individuals.
   (B) Located in low-, moderate-, middle-, and upper-income census
tracts.
   (C) Located inside the institution's assessment areas and outside
the institution's assessment areas.
   (2) The institution's community reinvestment disclosure statement,
which shall be placed by the institution its public file within
three business days of its receipt from the commissioner.
   (b) An institution required to report home mortgage loan data
pursuant to the implementing regulations for the federal Home
Mortgage Disclosure Act regulations (12 CFR 203) shall include in its
public file a copy of the act's disclosure statement provided by the
Federal Financial Institutions Examination Council pertaining to the
institution for each of the prior two calendar years.  In addition,
an institution that elected to have the commissioner consider the
mortgage lending of an affiliate for any of these years shall include
in its public file the affiliate's federal Home Mortgage Disclosure
Act disclosure statement for those years.  The institution shall
place the statements in its public file within three business days
after its receipt.
   (c) A small institution or an institution that was a small
institution during the prior calendar year shall include the
following in its public file:
   (1) The institution's loan-to-deposit ratio for each quarter of
the prior calendar year and, at its option, additional data on its
loan-to-deposit ratio.
   (2) The information required for other institutions by Section
60029, if the institution has elected to be evaluated under the
lending, investment, and service tests.
   (d) An institution that has been approved to be assessed under a
strategic plan shall include in its public file a copy of that plan.
An institution need not include information submitted to the
commissioner on a confidential basis in conjunction with the plan.
   (e) An institution that received a less than satisfactory rating
during its most recent examination shall include in its public file a
description of its current efforts to improve its performance in
helping to meet the credit needs of its entire community.  The
institution shall update the description quarterly.
   60031.  (a) An institution shall make available to the public for
inspection upon request and at no cost the information required in
Section 60030 as follows:
   (1) At the main office and, if an interstate institution, at one
branch office in each state, all information in its public file.
   (2) At each branch:
   (A) A copy of the public section of the institution's most recent
community reinvestment performance evaluation and a list of services
provided by the branch.
   (B) Within five calendar days of the request, all the information
in its public file relating to the assessment area in which the
branch is located.
   (b) Upon request, an institution shall provide copies, either on
paper or in another form acceptable to the person making the request,
of the information in its public file.  The institution may charge a
reasonable fee not to exceed the cost of copying and mailing, if
applicable.
   (c) Except as otherwise provided in Sections 6029, 6030, and this
section, an institution shall ensure that the information required by
those provisions and this section are current as of April 1 of each
year.
   60032.  An institution shall provide in the public lobby of its
main office and each of its branches the appropriate public notice
set forth in Chapter 4 (commencing with Section 60050).  Only a
branch of an institution having more than one assessment area shall
include the bracketed material in the notice for branch offices.
Only an institution that is an affiliate of a holding company shall
include the next to the last sentence of the notices. An institution
shall include the last sentence of the notices only if it is an
affiliate of a holding company that is not prevented by statute from
acquiring additional institutions.
   60033.  The commissioner shall publish at least 30 days in advance
of the beginning of each calendar quarter a list of institutions
scheduled for community reinvestment examinations in that quarter.
   60034.  The commissioner shall establish alternative examination
procedures for institutions which were rated "outstanding" as of
their most recent state or federal Community Reinvestment Act
compliance examination. After January 1, 1998, the alternative
examination procedures shall also apply to institutions which were
rated "high satisfactory" as of their most recent state or federal
examination.  The purpose of the alternative procedures shall be to
reduce the cost to institutions.  The alternative procedures shall in
no way limit public participation.

      CHAPTER 3.  RATINGS

   60040.  (a) In assigning a rating, the commissioner shall evaluate
an institution's performance under the applicable performance
criteria in this division, in accordance with Sections 60010, 60011,
60012, and 60024, which provides for adjustments on the basis of
evidence of discriminatory or other illegal credit practices.
   (b) An institution's performance is not required to fit each
aspect of a particular rating profile in order to receive that
rating, and exceptionally strong performance with respect to some
aspects may compensate for weak performance in others.  The
institution's overall performance, however, shall be consistent with
safe and sound banking practices and generally with the appropriate
rating profile as provided in this chapter.
   60041.  The commissioner shall assign each institution's lending
performance one of the five following ratings:
   (a) The commissioner shall rate an institution's lending
performance "outstanding" if, in general, it demonstrates:
   (1) Excellent responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in its
assessment areas.
   (2) A substantial majority of its loans are made in its assessment
areas.
   (3) An excellent geographic distribution of loans in its
assessment areas.
   (4) An excellent distribution, particularly in its assessment
area, of loans among individuals of different income levels and
businesses, including farms, of different sizes, given the product
lines offered by the institution.
   (5) An excellent record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, low-income
individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in their
neighborhoods, or businesses, including farms, with gross annual
revenues of one million dollars ($1,000,000) or less, consistent with
safe and sound operations.
   (6) Extensive use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income individuals or geographies.
   (7) It is a leader in making community development loans.
   (8) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (9) An excellent record relative to fair lending policies and
practices.
   (b) The commissioner shall rate an institution's lending
performance "high satisfactory" if, in general, it demonstrates:
   (1) Good responsiveness to credit needs in its assessment areas,
taking into account the number and amount of home mortgage, small
business, small farm, and consumer loans, if applicable, in its
assessment areas.
   (2) A high percentage of its loans are made in its assessment
areas.
   (3) A good geographic distribution of loans in its assessment
areas.
                                                        (4) A good
distribution, particularly in its assessment areas, of loans among
individuals of different income levels and businesses, including
farms, of different sizes, given the product lines offered by the
institution.
   (5) A good record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, low-income
individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in their
neighborhoods, or businesses, including farms, with gross annual
revenues of one million dollars ($1,000,000) or less, consistent with
safe and sound operations.
   (6) Use of innovative or flexible lending practices in a safe and
sound manner to address the credit needs of low- and moderate-income
individuals or geographies.
   (7) It has made a relatively high level of community development
loans.
   (8) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (9) A good record relative to fair lending policies and practices.

   (c) The commissioner shall rate an institution's lending
performance "satisfactory" if, in general, it demonstrates:
   (1) Adequate responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in its
assessment areas.
   (2) An adequate percentage of its loans are made in its assessment
areas.
   (3) An adequate geographic distribution of loans in its assessment
areas.
   (4) An adequate distribution, particularly in its assessment
areas, of loans among individuals of different income levels and
businesses, including farms, of different sizes, given the product
lines offered by the institution.
   (5) An adequate record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, low-income
individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in their
neighborhoods, or businesses, including farms, with gross annual
revenues of one million dollars ($1,000,000) or less, consistent with
safe and sound operations.
   (6) Limited use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income individuals or geographies.
   (7) It has made an adequate level of community development loans.

   (8) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (9) An adequate record relative to fair lending policies and
practices.
   (d) The commissioner shall rate an institution's lending
performance "needs to improve" if, in general, it demonstrates:
   (1) Poor responsiveness to credit needs in its assessment areas,
taking into account the number and amount of home mortgage, small
business, small farm, and consumer loans, if applicable, in its
assessment areas.
   (2) A small percentage of its loans are made in its assessment
areas.
   (3) A poor geographic distribution of loans, particularly to low-
and moderate-income geographies, in its assessment areas.
   (4) A poor distribution, particularly in its assessment areas, of
loans among individuals of different income levels and businesses,
including farms, of different sizes, given the product lines offered
by the institution.
   (5) A poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, low-income
individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in their
neighborhoods, or businesses, including farms, with gross annual
revenues of one million dollars ($1,000,000) or less, consistent with
safe and sound operations.
   (6) Little use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income individuals or geographies.
   (7) It has made a  level of community development loans.
   (8) There is possible evidence of loans that show an undue
concentration and a systematic pattern of lending resulting in the
loss of affordable housing units.
   (9) A poor record relative to fair lending policies and practices.

   (e) The commissioner shall rate an institution's lending
performance as being in "substantial noncompliance" if, in general,
it demonstrates:
   (1) A very poor responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
small business, small farm, and consumer loans, if applicable, in its
assessment areas.
   (2) A very small percentage of its loans are made in its
assessment areas.
   (3) A very poor geographic distribution of loans, particularly to
low-and moderate-income geographies, in its assessment areas.
   (4) A very poor distribution, particularly in its assessment
areas, of loans among individuals of different income levels and
businesses, including farms, of different sizes, given the product
lines offered by the institution.
   (5) A very poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, low-income
individuals, including loans to assist existing low- and
moderate-income residents to be able to remain in their
neighborhoods, or businesses, including farms, with gross annual
revenues of one million dollars ($1,000,000) or less, consistent with
safe and sound operations.
   (6) No use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- and
moderate-income individuals or geographies.
   (7) It has made few, if any, community development loans.
   (8) Origination of loans that show an undue concentration and a
systematic pattern of lending resulting in the loss of affordable
housing units.
   (9) A very poor record relative to fair lending policies and
practices.
   60042.  The commissioner shall assign each institution's
investment performance one of the five following ratings:
   (a) The commissioner shall rate an institution's investment
performance "outstanding" if, in general, it demonstrates:
   (1) An excellent level of qualified investments, particularly
those that are not routinely provided by private investors, often in
a leadership position.
   (2) Extensive use of innovative or complex qualified investments.

   (3) Excellent responsiveness to credit and community development
needs.
   (b) The commissioner shall rate an institution's investment
performance "high satisfactory" if, in general, it demonstrates:
   (1) A significant level of qualified investments, particularly
those that are not routinely provided by private investors,
occasionally in a leadership position.
   (2) Significant use of innovative or complex qualified
investments.
   (3) Good responsiveness to credit and community development needs.

   (c) The commissioner shall rate an institution's investment
performance "satisfactory" if, in general, it demonstrates:
   (1) An adequate level of qualified investments, particularly those
that are not routinely provided by private investors, although
rarely in a leadership position.
   (2) Occasional use of innovative or complex qualified investments.

   (3) Adequate responsiveness to credit and community development
needs.
   (d) The commissioner rates an institution's investment performance
"needs to improve" if, in general, it demonstrates:
   (1) A poor level of qualified investments, particularly those that
are not routinely provided by private investors.
   (2) Rare use of innovative or complex qualified investments.
   (3) Poor responsiveness to credit and community development needs.

   (e) The commissioner shall rate an institution's investment
performance as being in "substantial noncompliance" if, in general,
it demonstrates:
   (1) Few, if any, qualified investments, particularly those that
are not routinely provided by private investors.
   (2) No use of innovative or complex qualified investments.
   (3) Very poor responsiveness to credit and community development
needs.
   60043.  The commissioner shall assign each institution's service
performance one of the five following ratings.
   (a) The commissioner shall rate an institution's service
performance "outstanding" if, in general, the institution
demonstrates:
   (1) Its service delivery systems are readily accessible to
geographies and individuals of different income levels in its
assessment areas.
   (2) To the extent changes have been made, its record of opening
and closing branches has improved the accessibility of its delivery
systems, particularly in low- and moderate-income geographies or to
low- and moderate-income individuals;
   (3) Its services, including, where appropriate, business hours,
are tailored to the convenience and needs of its assessment areas,
particularly low- and moderate-income geographies or low- and
moderate-income individuals.
   (4) It is a leader in providing community development services.
   (b) The commissioner shall rate an institution's service
performance "high satisfactory" if, in general, the institution
demonstrates:
   (1) Its service delivery systems are accessible to geographies and
individuals of different income levels in its assessment areas.
   (2) To the extent changes have been made, its record of opening
and closing branches has not adversely affected the accessibility of
its delivery systems, particularly in low- and moderate-income
geographies and to low- and moderate-income individuals.
   (3) Its services, including, where appropriate, business hours, do
not vary in a way that inconveniences its assessment areas,
particularly low- and moderate-income geographies and low- and
moderate-income individuals.
   (4) It provides a relatively high level of community development
services.
   (c) The commissioner shall rate an institution's service
performance "satisfactory" if, in general, the institution
demonstrates:
   (1) Its service delivery systems are reasonably accessible to
geographies and individuals of different income levels in its
assessment areas.
   (2) To the extent changes have been made, its record of opening
and closing branches has generally not adversely affected the
accessibility of its delivery systems, particularly in low- and
moderate-income geographies and to low- and moderate-income
individuals.
   (3) Its services, including, where appropriate, business hours, do
not vary in a way that inconveniences its assessment area,
particularly low- and moderate-income geographies and low- and
moderate-income individuals.
   (4) It provides an adequate level of community development
services.
   (d) The commissioner shall rate an institution's service
performance "needs to improve" if, in general, the institution
demonstrates:
   (1) Its service delivery systems are unreasonably inaccessible to
portions of its assessment areas, particularly to low- and
moderate-income geographies or to low- and moderate-income
individuals.
   (2) To the extent changes have been made, its record of opening
and closing branches has adversely affected the accessibility its
delivery systems, particularly in low- and moderate-income
geographies or to low- and moderate-income individuals.
   (3) Its services, including, where appropriate, business hours,
vary in a way that inconveniences its assessment areas, particularly
low- and moderate-income geographies or low- and moderate-income
individuals.
   (4) It provides a limited level of community development services.

   (e) The commissioner shall rate an institution's service
performance as being in "substantial noncompliance" if, in general,
the institution demonstrates:
   (1) Its service delivery systems are unreasonably inaccessible to
significant portions of its assessment areas, particularly to low-
and moderate-income geographies or to low- and moderate-income
individuals.
   (2) To the extent changes have been made, its record of opening
and closing branches has significantly adversely affected the
accessibility of its delivery systems, particularly in low- and
moderate-income geographies or to low- and moderate-income
individuals.
   (3) Its services (including, where appropriate, business hours)
vary in a way that significantly inconveniences its assessment areas,
particularly low- and moderate-income geographies or low- and
moderate-income individuals.
   (4) It provides few, if any, community development services.
   60044.  The commissioner shall assign each wholesale or limited
purpose institution's community development performance one of the
five following ratings:
   (a) The commissioner shall rate a wholesale or limited purpose
institution's community development performance "outstanding" if, in
general, it demonstrates:
   (1)  A high level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors.
   (2) Extensive use of innovative or complex qualified investments,
community development loans, or community development services.
   (3) Excellent responsiveness to credit and community development
needs in its assessment areas.
   (b) The commissioner shall rate a wholesale or limited purpose
institution's community development performance "high satisfactory"
if, in general, it demonstrates:
   (1) A significant level of community development loans, community
development services or qualified investments, particularly
investments that are not routinely provided by private investors.
   (2) Frequent use of innovative or complex qualified investments,
community development loans or community development services.
   (3) High responsiveness to credit and community development needs
in its assessment area.
   (c) The commissioner shall rate a wholesale or limited purpose
institution's community development performance "satisfactory" if, in
general, it demonstrates:
   (1) An adequate level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors.
   (2) Occasional use of innovative or complex qualified investments,
community development loans, or community development services.
   (3) Adequate responsiveness to credit and community development
needs in its assessment areas.
   (d) The commissioner shall rate a wholesale or limited purpose
institution's community development performance as "needs to improve"
if, in general, it demonstrates:
   (1) A poor level of community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors.
   (2) Rare use of innovative or complex qualified investments,
community development loans, or community development services.
   (3) Poor responsiveness to credit and community development needs
in its assessment areas.
   (e) The commissioner shall rate a wholesale or limited purpose
institution's community development performance in "substantial
noncompliance" if, in general, it demonstrates:
   (1) Few, if any, community development loans, community
development services, or qualified investments, particularly
investments that are not routinely provided by private investors.
   (2) No use of innovative or complex qualified investments,
community development loans, or community development services.
   (3) Very poor responsiveness to credit and community development
needs in its assessment areas.
   60045.  The commissioner shall rate the performance of each
institution evaluated under the small institution performance
standards as follows:
   (a) The commissioner rates an institution's performance
"satisfactory" if, in general, the institution demonstrates:
   (1) A reasonable loan-to-deposit ratio, considering seasonal
variations, given the institution's size, financial condition, the
credit needs of its assessment areas, and taking into account, as
appropriate, lending-related activities such as loan originations for
sale to the secondary markets and community development loans and
qualified investments.
   (2) A majority of its loans and, as appropriate, other
lending-related activities are in its assessment areas.
   (3) A distribution of loans to and, as appropriate, other lending
related-activities for individuals of different income levels,
including low-and moderate-income individuals, and businesses and
farms of different sizes that is reasonable given the demographics of
the institution's assessment areas.
   (4) A record of taking appropriate action, as warranted, in
response to written complaints, if any, about the institution's
performance in helping to meet the credit needs of its assessment
areas and reasonable performance with regard to fair lending policies
and practices.
   (5) A reasonable geographic distribution of loans given the
institution's assessment areas.
   (b) An institution that meets each of the standards for a
"satisfactory" rating under this paragraph and exceeds some or all of
those standards may warrant consideration for an overall rating of
"high satisfactory" or "outstanding."  In assessing whether an
institution's performance is "high satisfactory" or "outstanding,"
the commissioner considers the degree to which the institution
exceeds each of the performance standards for a "satisfactory" rating
and its performance in making community development loans or
qualified investments and its performance in providing branches and
other services and delivery systems that enhance credit availability
in its assessment areas.
   (c) An institution also may receive a rating of "needs to improve"
or "substantial noncompliance" depending on the degree to which its
performance has failed to meet the standards for a "satisfactory"
rating.
   60046.  (a)  The commissioner shall approve as "satisfactory"
measurable goals that adequately help to meet the credit needs of the
institution's assessment areas.
   (b) If the plan identifies a separate group of measurable goals
that substantially exceed the levels approved as "satisfactory," the
commissioner shall approve those goals as "outstanding."
   (c) The commissioner shall assess the performance of an
institution operating under an approved plan to determine if the
institution has met its plan goals as follows:
   (1) If the institution substantially achieves its plan goals for a
satisfactory rating, the commissioner will rate the institution's
performance under the plan as "satisfactory."
   (2) If the institution achieves all of its goals for a
satisfactory rating, and exceeds some or all of its plan goals for a
satisfactory rating, the commissioner will rate the institution under
the plan as "high satisfactory."
   (3) If the institution exceeds its plan goals for a satisfactory
rating and substantially achieves its plan goals for an outstanding
rating, the commissioner shall rate the institution's performance
under the plan as "outstanding."
   (4) If the institution fails to meet substantially its plan goals
for a satisfactory rating, the Commissioner shall rate the
institution as either "needs to improve" or "substantial
noncompliance," depending on the extent to which it falls short of
its plan goals, unless the institution elected in its plan to be
rated otherwise, as provided in subdivision (l) of Section 60022.
   60047.  The commissioner shall assign each credit union's lending
performance one of the five following ratings:
   (a) The commissioner shall rate a credit union's lending
performance "outstanding" if, in general, it demonstrates:
   (1) Excellent responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
and consumer loans, if applicable, in its assessment areas.
   (2) A substantial majority of its loans are made in its assessment
areas.
   (3) An excellent geographic distribution of loans in its
assessment areas, provided however, a geographic analysis is relevant
in the context of the credit union's membership by-law provisions.
   (4) An excellent distribution, particularly in its assessment
areas, of loans among members of different income levels, given the
product lines offered by the credit union.
   (5) An excellent record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, and
low-income members, including loans and other efforts to assist
existing low- and moderate-income members to be able to remain in
their neighborhoods, consistent with safe and sound operations.
   (6) Extensive use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income members or geographies.
   (7) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (8) An excellent record relative to fair lending policies and
practices.
   (b) The commissioner shall rate a credit union's lending
performance "high satisfactory" if, in general, it demonstrates:
   (1) Good responsiveness to credit needs in its assessment areas,
taking into account the number and amount of home mortgage, and
consumer loans, if applicable, in its assessment areas.
   (2) A high percentage of its loans are made in its assessment
areas.
   (3) A good geographic distribution of loans in its assessment
areas, provided however, a geographic analysis is relevant in the
context of the credit union's membership by-law provisions.
   (4) A good distribution, particularly in its assessment areas, of
loans among members of different income levels, given the product
lines offered by the credit union;
   (5) A good record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, and
low-income members, including loans and other efforts to assist
existing low- and moderate-income members to be able to remain in
their neighborhoods, consistent with safe and sound operations;
   (6) Use of innovative or flexible lending practices in a safe and
sound manner to address the credit needs of low- and moderate-income
members or geographies.
   (7) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (8) A good record relative to fair lending policies and practices.

   (c) The commissioner shall rate a credit union's lending
performance "satisfactory" if, in general, it demonstrates:
   (1) Adequate responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
and consumer loans, if applicable, in its assessment areas.
   (2) An adequate percentage of its loans are made in its assessment
areas.
   (3) An adequate geographic distribution of loans in its assessment
areas, provided however, a geographic analysis is relevant in the
context of the credit union's membership by-law provisions.
   (4) An adequate distribution, particularly in its assessment
areas, of loans among members of different income levels, given the
product lines offered by the credit union;
   (5) An adequate record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, and
low-income members, including loans and other efforts to assist
existing low- and moderate-income members to be able to remain in
their neighborhoods, consistent with safe and sound operations.
   (6) Limited use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income members or geographies.
   (7) There is no evidence of loans that show an undue concentration
and a systematic pattern of lending resulting in the loss of
affordable housing units.
   (8) An adequate record relative to fair lending policies and
practices.
   (d) The commissioner shall rate a credit union's lending
performance "needs to improve" if, in general, it demonstrates:
   (1) Poor responsiveness to credit needs in its assessment areas,
taking into account the number and amount of home mortgage, and
consumer loans, if applicable, in its assessment areas.
   (2) A small percentage of its loans are made in its assessment
areas.
   (3) A poor geographic distribution of loans, particularly to low-
and moderate-income geographies, in its assessment areas, provided
however, a geographic analysis is relevant in the context of the
credit union's membership by-law provisions.
   (4) A poor distribution, particularly in its assessment areas, of
loans among members of different income levels, given the product
lines offered by the credit union.
   (5) A poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, and
low-income members, including loans and other efforts to assist
existing low- and moderate-income members to be able to remain in
their neighborhoods, consistent with safe and sound operations.
   (6) Little use of innovative or flexible lending practices in a
safe and sound manner to address the credit needs of low- and
moderate-income members or geographies;
   (7) There is possible evidence of loans that show an undue
concentration and a systematic pattern of lending resulting in the
loss of affordable housing units; and
   (8) A poor record relative to fair lending policies and practices.

   (e) The commissioner shall rate a credit union's lending
performance as being in "substantial noncompliance" if, in general,
it demonstrates:
   (1) A very poor responsiveness to credit needs in its assessment
areas, taking into account the number and amount of home mortgage,
and consumer loans, if applicable, in its assessment areas.
   (2) A very small percentage of its loans are made in its
assessment areas.
   (3) A very poor geographic distribution of loans, particularly to
low-and moderate-income geographies, in its assessment areas,
provided however, a geographic analysis is relevant in the context of
the credit union's membership by-law provisions.
   (4) A very poor distribution, particularly in its assessment
areas, of loans among members of different income levels, given the
product lines offered by the credit union.
   (5) A very poor record of serving the credit needs of highly
economically disadvantaged areas in its assessment areas, and
low-income members, including loans and other efforts to assist
existing low- and moderate-income members to be able to remain in
                                          their neighborhoods,
consistent with safe and sound operations.
   (6) No use of innovative or flexible lending practices in a safe
and sound manner to address the credit needs of low- and
moderate-income members or geographies.
   (7) Origination of loans that show an undue concentration and a
systematic pattern of lending resulting in the loss of affordable
housing units.
   (8) A very poor record relative to fair lending policies and
practices.
   60048.  The commissioner shall assign each credit union's service
performance one of the five following ratings:
   (a) The commissioner shall rate a credit union's service
performance "outstanding" if, in general, the credit union
demonstrates:
   (1) Its service delivery systems are readily accessible to members
and geographies of different income levels in its assessment areas.

   (2) To the extent changes have been made, its record of opening
and closing branches has improved the accessibility of its delivery
systems, particularly to low- and moderate-income members or in low-
and moderate-income geographies.
   (3) Its services, including, where appropriate, business hours,
are tailored to the convenience and needs of its assessment areas,
particularly low- and moderate-income members or in low- and
moderate-income geographies.
   (4) It is a leader in providing community development services.
   (b)  The commissioner shall rate a credit union's service
performance "high satisfactory" if, in general, the credit union
demonstrates:
   (1) Its service delivery systems are accessible to members and
geographies of different income levels in its assessment areas.
   (2) To the extent changes have been made, its record of opening
and closing branches has not adversely affected the accessibility of
its delivery systems, particularly to low- and moderate-income
members and in low- and moderate-income geographies.
   (3) Its services, including, where appropriate, business hours, do
not vary in a way that inconveniences its assessment areas,
particularly low- and moderate-income members and low- and
moderate-income geographies; and
   (4) It provides a relatively high level of community development
services.
   (c) The commissioner shall rate a credit union's service
performance "satisfactory" if, in general, the credit union
demonstrates:
   (1) Its service delivery systems are reasonably accessible to
members and geographies of different income levels in its assessment
areas.
   (2) To the extent changes have been made, its record of opening
and closing branches has generally not adversely affected the
accessibility of its delivery systems, particularly to low- and
moderate-income members and in low-and moderate-income geographies.
   (3) Its services, including, where appropriate, business hours, do
not vary in a way that inconveniences its assessment areas,
particularly low- and moderate-income members and low- and
moderate-income geographies.
   (4) It provides an adequate level of community development
services.
   (d) The commissioner shall rate a credit union's service
performance "needs to improve" if, in general, the credit union
demonstrates:
   (1) Its service delivery systems are unreasonably inaccessible to
portions of its assessment areas, particularly to low- and
moderate-income members or to low- and moderate-income geographies.
   (2) To the extent changes have been made, its record of opening
and closing branches has adversely affected the accessibility its
delivery systems, particularly to low- and moderate-income members or
in low- and moderate-income geographies.
   (3) Its services, including, where appropriate, business hours,
vary in a way that inconveniences its assessment areas, particularly
low- and moderate-income members or low- and moderate-income
geographies.
   (4) It provides a limited level of community development services.

   (e) The commissioner shall rate a credit union's service
performance as being in "substantial noncompliance" if, in general,
the credit union demonstrates:
   (1) Its service delivery systems are unreasonably inaccessible to
significant portions of its assessment areas, particularly to low-
and moderate-income members or to low- and moderate-income
geographies.
   (2) To the extent changes have been made, its record of opening
and closing branches has significantly adversely affected the
accessibility of its delivery systems, particularly to low- and
moderate-income members or in low-and moderate-income geographies.
   (3) Its services, including, where appropriate, business hours,
vary in a way that significantly inconveniences its assessment areas,
particularly low- and moderate-income members or low- and
moderate-income geographies.
   (4) It provides few, if any, community development services.
   60049.  (a) A credit union that achieves at least a "satisfactory"
rating under the lending and service tests may warrant consideration
for an overall rating of "high satisfactory" or "outstanding."  In
assessing whether a credit union's performance is "high satisfactory"
or "outstanding," the commissioner shall also consider the credit
union's performance in making qualified investments and community
development loans to the extent authorized under law.
   (b) The commissioner shall develop, by written policy or
directive, a matrix system which sets forth the methodology for
aggregating an institution's scores on the lending, service, and
investment tests to arrive at an assigned rating.

      CHAPTER 4.  COMMUNITY REINVESTMENT NOTICE

   60050.  The following notice shall be used for main offices of an
institution:  "CALIFORNIA COMMUNITY REINVESTMENT ACT NOTICE Under the
California Community Reinvestment Act (CCRA), the Commissioner of
Financial Institutions evaluates our record of helping to meet the
credit needs of this community consistent with safe and sound
operations. The commissioner also takes this record into account when
deciding on certain applications submitted by us.  Your involvement
is encouraged.  You are entitled to certain information about our
operations and our performance under the CCRA, including, for
example, information about our branches, such as their location and
services provided at them; the public section of our most recent CCRA
Performance Evaluation, prepared by the commissioner; and comments
received from the public relating to our performance in helping to
meet community credit needs, as well as our responses to those
comments.  You may review this information today.  At least 30 days
before the beginning of each quarter, the commissioner publishes a
list of the institutions that are scheduled for CCRA examination by
the Commissioner in that quarter.  This list is available from the
commissioner.  You may send written comments about our performance in
helping to meet community credit needs to the commissioner.  Your
letter, together with any response by us, will be considered by the
commissioner in evaluating our CCRA performance and may be made
public.  You may ask to look at any comments received by the
commissioner. You may also request from the commissioner an
announcement of our applications covered by the CCRA filed with the
commissioner.  We are an affiliate of (name of holding company), a
bank holding company.  You may request from (title of responsible
official), Federal Reserve Bank of _______ (address) an announcement
of applications covered by the CCRA filed by bank holding companies."

   60051.  The following notice shall be used for branch offices of
an institution:  "CALIFORNIA COMMUNITY REINVESTMENT ACT NOTICE Under
the California Community Reinvestment Act (CCRA), the Commissioner of
Financial Institutions evaluates our record of helping to meet the
credit needs of this community consistent with safe and sound
operations. The commissioner also takes this record into account when
deciding on certain applications submitted by us.  Your involvement
is encouraged.  You are entitled to certain information about our
operations and our performance under the CCRA.  You may review today
the public section of our most recent CRA evaluation, prepared by
commissioner, and a list of services provided at this branch.  You
may also have access to the following additional information, which
we will make available to you at this branch within five calendar
days after you make a request to us:  (1) a map showing the
assessment area containing this branch, which is the area in which
the commissioner evaluates our CCRA performance in this community;
(2) information about our branches in this assessment area; (3) a
list of services we provide at those locations; (4) data on our
lending performance in this assessment area; and (5) copies of all
written comments received by us that specifically relate to our CCRA
performance in this assessment area, and any responses we have made
to those comments.  If we are operating under an approved strategic
plan, you may also have access to a copy of the plan.  (If you would
like to review information about our CCRA performance in other
communities served by us, the public file for our entire institution
is available at (name of office located in state), located at
(address).) At least 30 days before the beginning of each quarter,
the commissioner publishes a list of the institutions that are
scheduled for CCRA examination by the commissioner in that quarter.
This list is available from the commissioner.  You may send written
comments about our performance in helping to meet community credit
needs to the commissioner.  Your letter, together with any response
by us, will be considered by the commissioner in evaluating our CCRA
performance and may be made public.  You may ask to look at any
comments received by the commissioner. You may also request from the
commissioner an announcement of our applications covered by the CCRA
filed with the commissioner.  We are an affiliate of (name of holding
company), a bank holding company.  You may request from (title of
responsible official), Federal Reserve Bank of _______ (address) an
announcement of applications covered by the CCRA filed by bank
holding companies."

   60052.  Notwithstanding the requirements of this division, the
information and disclosures required under the CCRA Notice may be
combined with or as an alternative, attached to in the form of an
addendum, the information and disclosures required under the Federal
Community Reinvestment Act (12 USC 2901 et seq.), or any regulations
thereunder.