PUBLIC DISCLOSURE. August 3, 2015 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION. Green Dot Bank RSSD #

Transcription

1 PUBLIC DISCLOSURE COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Green Dot Bank RSSD # North 200 West Federal Reserve Bank of San Francisco 101 Market Street San Francisco, California NOTE: This document is an evaluation of this institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.

2 TABLE OF CONTENTS INSTITUTION RATING Institution's Community Reinvestment Act (CRA) Rating... 1 INSTITUTION ~. 2 Description of Institution... 2 Scope of Examination DESCRIPTION OF ASSESSMENT AREA... 4 Provo-Orem Assessment Area... 4 DESCRIPTION OF OPERATIONS IN UTAH AND JUAB COUNTIES... 4 CONCLUSIONS WITH RESPECT TO PERFORMANCE,..,..,...,,..., Combined Small Business Lending, Community Development Lending and Investment Goals ANNUAL SMALL BUSINESS LENDING, COMMUNITY DEVELOPMENT LENDING AND INVESTMENTS GOALS Service Goals ANNUAL SERVICE HOURS GOALS Fair Lending or Other Illegal Credit Practices Review GLOSSARY OF TERMS

3 INSTITUTION RATING Institution's Community Reinvestment Act (CRA) Rating Green Dot Bank is rated "Outstanding" Green Dot Bank's (GOB) CRA performance reflects an outstanding record of helping to meet the credit needs of its assessment area, as outlined in its approved CRA Strategic Plan (Plan) for 2012 through GOB met or exceeded the goals set to achieve an outstanding rating in all performance categories. The following supports the outstanding performance rating: An outstanding combined level of small business loans, community development loans and investments that primarily helped address the need for affordable housing targeted to low- and moderate-income individuals; An outstanding level of community development services, including financial education and literacy programs targeted to low- and moderate-income individuals; and GOB did not receive any complaints relating to its CRA performance. There was no evidence of violations of the substantive provisions of anti-discrimination and fair lending laws and regulations, or of other credit practice rules, laws or regulations identified during the consumer compliance examination conducted concurrently with this CRA performance evaluation. 1

4 INSTITUTION Description of Institution GDB, headquartered in, with total assets of $700 million as of December 31, 2014, is a wholly-owned subsidiary of Green Dot Corporation (GDC). GDC acquired Bonneville Bancorp on December 8, Bonneville Bancorp was the holding company of Bonneville Bank, a single-office, commercial bank located in. GDB continues to do business under the Bonneville Bank name. GDB's strategic focus is the issuance of general purpose reloadable prepaid debit cards targeted to consumers through the bank's nationwide retailer network, as well as online, and in financial services centers. GDB also provides a mobile-based checking account product, GoBank, available online and nationally through retail stores. Additionally, GDB is a full-service community bank that offers a variety of commercial loan products and services to local businesses and a limited number of consumer loan products. Commercial loan products include real estate secured fixed rate term loans, fixed rate lines of credit, and unsecured loans. Consumer loan products include personal unsecured installment loans and lines of credit, and new and used vehicle loans. Other business services include a variety of checking, savings and money market accounts. Consumer deposit products include various checking, savings and certificate of deposit products. Exhibit 1 below depicts GDB's loan portfolio as stated in the Consolidated Reports of Condition and Income as of December 31, 2014, and reflects the bank's commercial lending focus. Commercialpurpose loans account for just over half of the loan portfolio, and loans secured by one-to-four family residential real estate within the portfolio are for commercial-purposes as well. ExHIBIT 1 LOANS AND l.eases AS OF DECEMBER 31, 2014 Loan Type $ ('OOOs) % Commercial/Industrial & Non-Farm Non-Residential Real Estate 3, Secured by 1-4 Family Residential Real Estate 1, Consumer Loans & Credit Cards Multi-Family Residential Real Estate Farm Land & Agriculture Construction & Land Development All Other Total (Gross) 7, GDB has delineated its one assessment area as the Provo-Orem Metropolitan Statistical Area (MSA). The MSA is made up of two contiguous counties, Utah and Juab. The bank has not made any changes to its assessment area since the previous CRA examination. GDB received a satisfactory rating at its previous CRA examination, conducted as of June 4, 2012, by the Federal Reserve Bank of San Francisco using the lnteragency Small Institution Examination Procedures. GDB faces no legal or financial impediments that would prevent it from helping to meet the credit needs 2

5 of its assessment area consistent with its business strategy, size, financial capacity, and local economic conditions. Scope of Examination GDB was evaluated under the lnteragency Strategic Plan CRA Examination Procedures. GDB's Plan was approved by the Board of Governors of the Federal Reserve System on March 27, The Plan outlines measurable goals for outstanding and satisfactory ratings. These include combined goals for small business lending, community development lending, and investments, and separate community development service goals. The Plan defines annual goals for 2012 through Additionally, the examination involved discussions with members of the bank's local communities and bank management as well as a review of the relevant information and data to help provide context for the bank's performance. 3

6 DESCRIPTION OF ASSESSMENT AREA Provo-Orem Assessment Area DESCRIPTION OF OPERATIONS IN UTAH AND JUAB COUNTIES The Provo-Orem assessment area consists of the counties of Utah and Juab in their entireties and constitutes the Provo-Orem MSA. As of 2013, Utah County had a population of 529,262 and a median household income of $60,196, while Juab County had a population of 10,300 and a median household income of $55, GDB has a relatively limited presence and small portion of the overall deposit market share in the assessment area. As of June 30, 2014, there were 14 institutions insured by the Federal Deposit Insured Corporation within the assessment areas operating 85 offices with total deposits of $5.9 billion. GOB ranks fifth with 8.7 percent of the deposit market share and total deposits of $ million. 2 In 2014, there were 54 small businesses lenders in the assessment area subject the reporting requirements of CRA. These lenders extended 4,815 loans totaling approximately $89.8 million. 3 Reporting institutions represent only a portion of all institutions competing for the small business lending in the assessment area. Exhibit 2, on the next page, presents key demographic and business information used to help develop a performance context for the assessment area, based on the 2010 U.S. Census and 2014 Dun and Bradstreet data. 1 U.S. Census Bureau, American Community Survey 5-Yr Estimate, Selected Social Characteristics DP02-DP03, 2013; available from: (accessed July 10, 2015). 2 Federal Deposit Insurance Corporation, Deposit Market Share Report, June 30, 2014; available from: 3 Information based on 2012 aggregate data consisting of institutions required to file annual CRA data. 4

7 EXHIBIT2 ASSESSMENT AREA DEMOGRAPHICS PROVO-OREM ASSESSMENT AREA Income Categories Tract Distribution Families by Tract Income Families < Poverty Level as% of Families by Tract Families by Family Income # % # % # % # % Low-income , , , Moderate-income , , , Middle-income , , , Upper-income , , , Unknown-income Total AA , , , Housing Housing Types by Tract Income Categories Units by Owner-Occupied Rental Vacant Tract # % % # % # % Low-income 10,601 1, , Moderate-income 26,034 11, , , Middle-income 74,989 55, , , Upper-income 34,581 28, , , Total AA 146,205 96, , , Total Businesses by Businesses by Tract & Revenue Size Income Categories Tract Less Than or Equal Greater than $1 Revenue Not to $1 Million Million Reported # % # % # % # Low-income Moderate-income 3, , Middle-income 11, , Upper-income 6, , Total AA 21, , , % of Total Businesses Median Family lncome 4 $63, Median Housing Value HUD Adjusted Median Family lncome 6 $64, Unemployment Rate % $222, % 4 U.S. Census Bureau, Annual Social and Economic Supplement; available from: hhes/www/lncome/data/ statemedlan/index.html 5 U.S. Census Bureau, QuickFacts; available from: 6 HUD Adjusted Median Family Income; available from: 7 U.S. Bureau of Lab or Statistics. Local Unemployment Statistics by County; available from: provo msa.html 5

8 Economic Conditions The Provo-Orem metro continued to show strong signs of economic growth particularly in the technology and education sectors which support many of the area's economic activities. Low rents and energy costs make the area an attractive location for technology companies seeking alternatives to Silicon Valley or the Texas and New York metro areas. 8 The area attracts startups and larger established tech companies like Adobe and Google. In the first nine months of 2014, the metro area drew $462 million in venture capital funding, providing opportunities for further investment in the area. 9 High tech employment has increased by almost a third since 2010, accounting for one in six new jobs. 1 Further supporting this tech sector, and providing valuable employment, is the area's university system. Brigham Young University and Utah Valley University have placed special emphasis on STEM (Science, Technology, Engineering and Math) programs, and the state of Utah has the lowest average student debt in the country, meaning that graduates are well-positioned entering the workforce. 11 The population growth associated with the strong economy has in turn led to an increase in construction hiring. Workers have been starting projects, many of which are residential, to make up for the area's housing shortage. 12 Consistent with the improving economy, an analysis of small business loan data reported by banks subject to the CRA indicates an uptick in lending from the lows experienced during the Great Recession, although levels remain depressed. 13 As depicted in Exhibit 2, there were approximately 19,864 small businesses operating in the assessment area in 2014, representing 91.2 percent of all businesses. National surveys suggest that depressed demand, uncertainty about the economy, and issues with credit worthiness may help explain the lower levels of lending to small businesses occurring during the review period. 14 Trends in unemployment data shown on the next page in Exhibit 3 also evidence the improving economy. During the review period, the unemployment rate declined consistently in both counties of the assessment area. At the end of 2014, the unemployment rate in both counties was significantly below that national average of 5.6 percent Moody's Precis Report, Provo-Orem, August Mochari, llan. "Move Over, Silicon Valley: Utah Has Arrived." Inc. November 10, 2014; available from: (accessed July 21, 2014). 10 Moody's Precis Report, Provo-Orem, December Moody's Precis Report, Provo-Orem, December Moody's Precis Report, Provo-Orem, December Aggregate CRA Small Business data reports available from: 14 Wiersch, Anne Marie. Good News and Bad News on Small Business Lending in January 5, Available from: unity%20development%20briefs/briefs/good%20n ews%20and%20bad%20news%20on%20small%20business%20lending%20in% aspx (accessed March 25, 2015). 15 Bureau of Labor Statistics, Local Area Unemployment Statistics by County, annual average; available from: (accessed July 21, 2015). 6

9 August 3, 201S 6.0% 5.0% 4.0% EXHIBIT 3 ANNUAL UNEMPLOYMENT RATES % 3.0% 2.0% 3.2% 2.7% 3.2% 1.0% 0.0% Utah State Utah County Juab County The prices of homes in the assessment area rose during the review period, and at the end of the third quarter of 2014 (the most recent data available),the median sales price was $225,000 in Utah County, $174,000 in Juab County, and $215,950 statewide as depicted in Exhibit 4 below. It should be noted that the housing stock in Juab County is extremely limited (only 27 homes were sold in the 3rd quarter of 2014), so the significant fluctuations in home prices evidenced in Exhibit 4 are due to limited data and not necessarily representative of broader trends. 16 $250,000 $230,000 EXHIBIT4 MEDIAN SALES PRICES JANUARY 2010-SEPTEMBER 2014 Utah State - Utah County Juab County $210,000 $190,000 $170,000 $150,000 $130,000.,i $110,000 $90,000 $70,000 $50,000 mmm~mmm~mmm~mmm~mmm Even with the escalation in home prices during the review period, Utah County still ranks as affordable for most middle class families looking to buy a home. According to a study by California real estate firm, 16 Utah Association of Realtors, Housing Statistics; available from: (accessed July 22, 2015). 7

10 Movoto, the nine most affordable places to live in Utah are all within in Utah County. 17 Nevertheless, many lower-income households struggle to find affordable housing. In 2013, median monthly rent was $864 in Utah County, and 43 percent of residents spent more than 35 percent of their income on rent (families who pay more than 30 percent of their income on rent are considered cost burdened). Median monthly rent was $757 in Juab County and 33 percent of households spent more than 35 percent of their income on rent. 18 The Urban Institute, a nonprofit social and economic policy research group, estimates that for every 100 very low-income renter households, there are only 20 units in Utah County. Juab County fares better in this category, with 47 units of affordable housing available. 19 As shown below in Exhibit 5, poverty and food stamp usage rates declined notably during the review period, but remained somewhat elevated. 20 However, certain parts of the assessment area fared much worse than others. According to a recent Brookings Institute study, the City of Provo is growing at the seventh fastest rate among all cities in the U.S., yet the city has a poverty rate roughly 20 percent higher than the rest of Utah. The median household income of the city is $20,000 less than the countywide average, and 32 percent of residents live below the poverty line. The poverty level is especially visible among the city's children. During the school year 40 percent of the school district's students qualified for the free lunch program, while an additional nine percent qualified for reduced lunches. 21 EXHIBIT 5 POVERTY AND FOOD STAMP USAGE % Utah State iljj uab County Utah County 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% _ 12.1% 8.3% 7.6o/e>--.0% 8.4% Poverty Food Stamp Usage 17 Christiansen, Barbara. "Utah County rates high on affordability scale." Daily Herald. May 1, 2014; available from: county-rates-high-on-affordability-scale/article d216b436-47e9-scbf-a611- af43a7bdda8e.html 18 U.S. Census Bureau, American Community Survey 5-Yr Estimate, Selected Social Characteristics DP04, 2013; available from: (accessed July 10, 2015). 19 Urban Institute, Housing Assistance Matter Initiative; available from: (accessed July 22, 2015). ' 0 U.S. Census Bureau, American Community Survey 1-Yr Estimate, Selected Social Characteristics DP03, 2013; available from: (accessed September 19, 2014). 21 Pugmire, Genelle. "Provo's poverty growth in top 10 cities in the nation." Daily Herald. August 17, 2014; available from: her a ldex tra. comln ew s/loca I/ centra l/provo/provo-s-pove rty-growth-i n-to p-d ties-in-the-nation/ article b9dc9897-gc24-58a 2- b4d 1-93a b. htm I 8

11 Credit and Community Development Needs The economic data previously discussed, as well as feedback from community contacts with small business development agencies, suggest that small businesses in the assessment area need access to a variety of forms of credit. As previously mentioned, data reported by banks subject to the CRA within the assessment area indicates that small businesses lending levels are increasing, but continue to remain depressed. A review of surveys of senior loan officers conducted by the Federal Reserve Board during the review period indicate that only a small percentage of banks have reported some easing of their lending standards to small firms. with annual sales of less than $50 million. 22 A review of information obtained from community contacts suggests there may be opportunities for banks to assist smaller businesses with startup costs. GDB's Plan also identified the need for small business credit and business development assistance within the assessment area. A variety of factors indicate that there is a need for affordable housing development and financing within the assessment area. High housing purchase and rental costs combined with limited availability of affordable rental units highlight a need for products and services that support access to affordable housing. Certain parts of the assessment area, such as the City of Provo, may be in greater need of these services than others. The Brookings Institute estimates that the home ownership rate in Provo is 25 percent lower than the statewide average. 23 Interviews with community contacts in the area generally reinforced this sentiment, and further supported that the demand for affordable housing outstrips the available supply and that there is a long waiting list for Section 8 units. Similarly, GDB's Plan identified the need for more affordable housing in the assessment area, noting the high cost burden to home owners and home renters. Finally, the prevalence of poverty and the need for social support services discussed earlier highlight the importance of community service organizations within the bank's communities The ongoing demand for services often results in needs for these organizations in terms of financial support and technical assistance as they attempt to service significant low-and moderate-income populations within the bank's assessment areas. The bank's Plan also identifies these needs and identifies specific community groups that it will partner with to help address these needs. 22 Federal Reserve Board, Senior Loan Officer Opinion Surveys; available from: 23 Pugmire, Genelle. "Provo's poverty growth in top 10 cities in the nation." Daily Herald. August 17, 2014; available from: ntral/provo/provo-s-poverty-growth-ln-top-cltles-ln-the-nation/article b9dc9897-6c24-58a2- b4d1-93a sb.html 9

12 CONCLUSIONS WITH RESPECT TO PERFORMANCE GOB established a three-year Plan by which its CRA performance is to be evaluated. GOB established measurable, quantitative goals to achieve satisfactory and outstanding ratings. The goals are annualized and are reasonable relative to bank's capacity and companies with similar CRA strategic plans. GOB's overall CRA performance reflects "Outstanding" performance in helping to meet the credit needs of its delineated assessment area in a manner consistent with the goals established by the Plan. Combined Small Business Lending, Community Development Lending and Investment Goals GOB exceeded the overall lending and investments goals established to achieve outstanding performance as shown in Exhibit 6. The bank significantly exceeded the goals for outstanding performance in 2012 and 2013, and met the goal for outstanding performance in Plan Year ExHIBIT6 ANNUAL SMALL BUSINESS LENDING, COMMUNITY DEVELOPMENT LENDING AND INVESTMENTS GOALS GOAlS AS PERCENTAGE OF AVERAGE ASSETS Outstanding: 1.50% Satisfactory: 1.25% Outstanding: 1.50% Satisfactory: 1.25% Outstanding: 1.50% Satisfactory: 1.25% Actual Small Community Performance - Business Development Investments ($) Cumulative Loans($) Loans($) Lending and Investment($) Actual Performance (% of Average Assets) $4,147,000 $99,214 $0 $4,246, % $2,670,000 $222,999 $4,721,758 $7,614, % $1,396,000 $222,999 $9,844,947 $11,463, % GDB activities provided needed credit for businesses within its assessment area and helped address the need for affordable housing and financial literacy. Community development lending totals in Exhibit 6 include the origination and renewal of two loans that provided a non-profit housing services organization with financing to purchase and renovate two dilapidated homes for subsequent rental as affordable housing for low- and moderate-income residents within the community. In addition, GOB's investment totals include new or renewed investments and donations that primarily helped address the needs for affordable housing and financial education within the bank's assessment area. The following are examples of noteworthy community development investments and donations: A $500,000 municipal bond purchase in 2013 and an $875,000 municipal bond purchase in 2014 that had primary purpose of providing affordable housing to low- and moderate-income individuals within the bank's assessment area. A total of six mortgage backed securities totaling $8.4 million secured by loans that provided financing for the purchase of affordable housing for low and moderate-income individuals within the Provo-Orem and broader statewide area. 10

13 A $20,000 donation used to help provide financial education to students of a Title 1 school located in and serving a low-and moderate-income area. A total of $12,000 in donations to non-profit organizations that provide financing for multifamily housing and other services for low- and moderate-income individuals and families throughout bank's assessment area and broader statewide area. Service Goals GDB's community development service performance during the review period significantly exceeded the Plan goals for an outstanding rating. The Plan outlines service goals by hours based on the number of full-time officers and employees at GDB and GDC. Exhibit 7 below provides information about the bank's performance relative to its service test goals. ExH1err7 ANNUAL SERVICE HOURS GOAlS Plan Year Bank Established Goals Bank Performance Satisfactory Hours Outstanding hours Qualified Service Hours Total GDB and GDC officers and employees provided qualified services to non-profit organizations and professional associations that helped promote nationwide educational outreach and financial literacy and community services targeted to low- and moderate-income individuals within the bank's assessment area. GDB and GDC officers and employees provided a total of 577 hours of services during the evaluation period. Noteworthy examples of community development services provided by GDB and GDC personnel include: One employee provided 17? service hours as a member of the board of directors for a nonprofit organization with a defined mission of providing credit availability for affordable housing within the bank's assessment area. Employees provided 61 hours of services teaching financial management to low- and moderateincome students at an elementary school in Orem, Utah. Students learned about basic money management and discussed savings and spending habits through interactive games and lessons in class. Employees utilized their technical and financial expertise to provide 33 hours of service to assist a Small Business Investment Company in developing an investment fund to support startup small businesses within the bank's assessment area and nationwide. Employees provided 28 hours of service to an organization that provides services to low-income families with children with developmental delays or disabilities. The program served children from low- and moderate-income families within the bank's assessment area. 11

14 Fair Lending or Other Illegal Credit Practices Review Concurrent with this CRA evaluation, a review of GDB's compliance with consumer protection laws and regulations was conducted. That review found no evidence of violations of the substantive provisions of anti-discrimination and fair lending laws and regulations, or of other credit practice rules, laws or regulations. 12

15 GLOSSARY OF TERMS Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage ofthe aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Census tract: A small subdivision of metropolitan and other densely populated counties. Census tract boundaries do not cross county lines; however, they may cross the boundaries of MSAs. Census tracts usually have between 2,500 and 8,000 persons, and their physical size varies widely depending upon population density. Census tracts are designed to be homogeneous with respect to population characteristics, economic status, and living conditions to allow for statistical comparisons. Community development: All Agencies have adopted the following language. Affordable housing (including multifamily rental housing) for low- or moderate-income individuals; community services targeted to low- or moderate-income individuals; 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 ) or have gross annual revenues of $1 million or less; or, activities that revitalize or stabilize lowor moderate-income geographies. Effective September 1, 2005, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have adopted the following additional language as part of the revitalize or stabilize definition of community development. Activities that revitalize or stabilize: (i) Low- or moderate-income geographies; (ii) Designated disaster areas; or (iii) Distressed or underserved nonmetropolitan middle-income geographies designated by the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on: a. Rates of poverty, unemployment, and population loss; or b. Population size, density, and dispersion. Activities that revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals. Consumer loan(s): A loan(s) 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. This definition includes the following categories: motor vehicle loans, credit card loans, home equity loans, other secured consumer loans, and other unsecured consumer loans. Family: Includes a householder and one or more other persons living in the same household who are related to the householder by birth, marriage, or adoption. The number of family households always equals the number of families; however, a family household may also include non-relatives living with the family. Families are classified by type as either a married-couple family or other family, which is further classified into 'male householder' (a family with a male householder and no wife present) or 'female householder' (a family with a female householder and no husband present). 13

16 Full-scope review: Performance under the lending and community development tests is analyzed considering performance context, quantitative factors (for example, geographic distribution, borrower distribution, and total number and dollar amount of investments), and qualitative factors (for example, responsiveness). Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census. Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders that do business or have banking offices in a MSA to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and the income of applications, the amount of loan requested, and the disposition of the application (for example, approved, denied, and withdrawn). Home mortgage loans: Includes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes and refinancings of home improvement and home purchase loans. Household: Includes all persons occupying a housing unit. Persons not living in households are classified as living in group quarters. In 100 percent tabulations, the count of households always equals the count of occupied housing units. Limited-scope review: Performance under the lending and community development tests is analyzed using only quantitative factors (for example, geographic distribution, borrower distribution, total number and dollar amount of investments, and branch distribution). Low-income: Individual income that is less than SO percent of the area median income, or a median family income that is less than SO percent, in the case of a geography. Market share: The number of loans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Metropolitan area (MA): A MSA or a metropolitan division (MD) as defined by the Office of Management and Budget. A MSA is a core area containing at least one urbanized area of S0,000 or more inhabitants, together with adjacent communities having a high degree of economic and social integration with that core. A MD is a division of a MSA based on specific criteria including commuting patterns. Only a MSA that has a population of at least 2.S million may be divided into MDs. Middle-income: 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. Moderate-income: Individual income that is at least SO percent and less than 80 percent of the area median income, or a median family income that is at least SO percent and less than 80 percent, in the case of a geography. Multifamily: Refers to a residential structure that contains five or more units. 14

17 August 3, 201S Other products: Includes any unreported optional category of loans for which the institution collects and maintains data for consideration during a CRA examination. Examples of such activity include consumer loans and other loan data an institution may provide concerning its lending performance. Owner-occupied units: Includes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged. Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share, or grant that has as its primary purpose community development. Rated area: A rated area is a state or multistate metropolitan area. For an institution with domestic branches in only one state, the institution's CRA rating would be the state rating. If an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. If an institution maintains domestic branches in two or more states within a multistate metropolitan area, the institution will receive a rating for the multistate metropolitan area. Small loan(s) to business( es): A loan included in 'loans to small businesses' as defined in the Consolidated Report of Condition and Income (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are either secured by nonfarm or nonresidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as "small business loans" if the loans are reported on the TFR as nonmortgage, commercial loans. Small loan(s) to farm(s): A loan included in 'loans to small farms' as defined in the instructions for preparation of the Consolidated Report of Condition and Income (Call Report). These loans have original amounts of $500,000 or less and are either secured by farmland, or are classified as loans to finance agricultural production and other loans to farmers. Upper-income: Individual income that is more than 120 percent of the area median income, or a median family income that is more than 120 percent, in the case of a geography. 15