(a) In general. A bank or savings association must delineate one or more facility-based assessment areas within which the appropriate Federal banking agency evaluates the bank's or savings association's record of helping to meet the credit needs of its entire community pursuant to the performance tests and strategic plan described in § 25.21.

(b) Geographic requirements for facility-based assessment areas. (1) Except as provided in paragraph (b)(3) of this section, a bank's or savings association's facility-based assessment areas must include each county in which a bank or savings association has a main office, a branch, or a deposit-taking remote service facility, as well as the surrounding counties in which the bank or savings association has originated or purchased a substantial portion of its loans (including home mortgage loans, multifamily loans, small business loans, small farm loans, and automobile loans).

(2) Except as provided in paragraph (b)(3) of this section, each of a bank's or savings association's facility-based assessment areas must consist of a single MSA, one or more contiguous counties within an MSA, or one or more contiguous counties within the nonmetropolitan area of a State.

(3) An intermediate bank or savings association or a small bank or savings association may adjust the boundaries of its facility-based assessment areas to include only the portion of a county that it reasonably can be expected to serve, subject to paragraph (c) of this section. A facility-based assessment area that includes a partial county must consist of contiguous whole census tracts.

(c) Other limitations on the delineation of a facility-based assessment area. Each of a bank's or savings association's facility-based assessment areas:

(1) May not reflect illegal discrimination; and

(2) May not arbitrarily exclude low- or moderate-income census tracts. In determining whether a bank or savings association has arbitrarily excluded low- or moderate-income census tracts from a facility-based assessment area, the appropriate Federal banking agency takes into account the bank's or savings association's capacity and constraints, including its size and financial condition.

(d) Military banks or savings associations. Notwithstanding the requirements of this section, a military bank or savings association whose customers are not located within a defined geographic area may delineate the entire United States and its territories as its sole facility-based assessment area.

(e) Use of facility-based assessment areas. The appropriate Federal banking agency uses the facility-based assessment areas delineated by a bank or savings association in its evaluation of the bank's or savings association's CRA performance unless the appropriate Federal banking agency determines that the facility-based assessment areas do not comply with the requirements of this section.

(a) In general. (1) Based upon the criteria described in paragraphs (b) and (c) of this section, a large bank or savings association must delineate retail lending assessment areas within which the appropriate Federal banking agency evaluates the bank's or savings association's record of helping to meet the credit needs of its entire community pursuant to § 25.22.

(2) A large bank or savings association is not required to delineate retail lending assessment areas for a particular calendar year if, in the prior two calendar years, the large bank or savings association originated or purchased within its facility-based assessment areas more than 80 percent of its home mortgage loans, multifamily loans, small business loans, small farm loans, and automobile loans if automobile loans are a product line for the large bank or savings association as described in paragraph II.a.1 of appendix A to this part.

(3) If, in a retail lending assessment area delineated pursuant to paragraph (c) of this section, the large bank or savings association did not originate or purchase any reported loans in any of the product lines that formed the basis of the retail lending assessment area delineation pursuant to paragraph (c)(1) or (2) of this section, the appropriate Federal banking agency will not consider the retail lending assessment area to have been delineated for that calendar year.

(b) Geographic requirements for retail lending assessment areas. (1) A large bank's or savings association's retail lending assessment area must consist of either:

(i) The entirety of a single MSA (using the MSA boundaries that were in effect as of January 1 of the calendar year in which the delineation applies), excluding any counties inside the large bank's or savings association's facility-based assessment areas; or

(ii) All of the counties in the nonmetropolitan area of a State (using the MSA boundaries that were in effect as of January 1 of the calendar year in which the delineation applies), excluding:

(A) Any counties included in the large bank's or savings association's facility-based assessment areas; and

(B) Any counties in which the large bank or savings association did not originate any closed-end home mortgage loans or small business loans that are reported loans during that calendar year.

(2) A retail lending assessment area may not extend beyond a State boundary unless the retail lending assessment area consists of counties in a multistate MSA.

(c) Delineation of retail lending assessment areas. Subject to the geographic requirements in paragraph (b) of this section, a large bank or savings association must delineate, for a particular calendar year, a retail lending assessment area in any MSA or in the nonmetropolitan area of any State in which it originated:

(1) At least 150 closed-end home mortgage loans that are reported loans in each year of the prior two calendar years; or

(2) At least 400 small business loans that are reported loans in each year of the prior two calendar years.

(d) Use of retail lending assessment areas. The appropriate Federal banking agency uses the retail lending assessment areas delineated by a large bank or savings association in its evaluation of the bank's or savings association's closed-end home mortgage lending and small business lending performance unless the appropriate Federal banking agency determines that the retail lending assessment areas do not comply with the requirements of this section.

(a) In general—(1) Large banks or savings associations. The appropriate Federal banking agency evaluates a large bank's or savings association's record of helping to meet the credit needs of its entire community in its outside retail lending area pursuant to § 25.22. However, the appropriate Federal banking agency will not evaluate a large bank or savings association in its outside retail lending area if it did not originate or purchase loans in any product lines in the outside retail lending area during the evaluation period.

(2) Intermediate or small banks or savings associations. The appropriate Federal banking agency evaluates the record of an intermediate bank or savings association, or a small bank or savings association that opts to be evaluated under the Retail Lending Test, of helping to meet the credit needs of its entire community in its outside retail lending area pursuant to § 25.22, for a particular calendar year, if:

(i) The bank or savings association opts to have its major product lines evaluated in its outside retail lending area; or

(ii) In the prior two calendar years, the bank or savings association originated or purchased outside the bank's or savings association's facility-based assessment areas more than 50 percent of the bank's or savings association's home mortgage loans, multifamily loans, small business loans, small farm loans, and automobile loans if automobile loans are a product line for the bank or savings association, as described in paragraph II.a.2 of appendix A to this part.

(b) Geographic requirements of outside retail lending areas—(1) In general. A bank's or savings association's outside retail lending area consists of the nationwide area, excluding:

(i) The bank's or savings association's facility-based assessment areas and retail lending assessment areas; and

(ii) Any county in a nonmetropolitan area in which the bank or savings association did not originate or purchase any closed-end home mortgage loans, small business loans, small farm loans, or automobile loans if automobile loans are a product line for the bank or savings association.

(2) Component geographic area. The outside retail lending area is comprised of component geographic areas. A component geographic area is any MSA or the nonmetropolitan area of any State, or portion thereof, included within the outside retail lending area.

The appropriate Federal banking agency may consider a bank's or savings association's community development loans, community development investments, and community development services provided outside of its facility-based assessment areas, as provided in this part.