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[Audio] This presentation includes information related to the Community Reinvestment Act, or CRA..

[Audio] CRA was enacted in 1977 to encourage insured depository institutions to help meet the credit needs of the communities in which they are chartered. CRA does not prohibit any activity, nor is it intended to encourage unsafe or unsound lending practices or the allocation of credit. CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community, including low-and moderate-income (LMI) neighborhoods, be assessed periodically. That record is taken into account when considering an institution's application for deposit facilities, including mergers and acquisitions..

[Audio] All state member banks, state non-member banks, national banks and savings associations are subject to regular CRA exams, regardless of their size and whether they are subject to the annual reporting requirement. All state member banks, state non-member banks, national banks and savings associations that meet or exceed the asset size threshold as of December 31 of both of the prior two calendar years are subject to the data collection and annual reporting requirements of CRA. The asset size thresholds that determine institution type are adjusted and announced by the federal banking agencies annually. There are multiple regulatory agencies with CRA oversight. Opportunity Bank of Montana is regulated by the Federal Reserve (FED)..

[Audio] CRA considers five different types of institutions. Small Bank – a bank that as of December 31 of either of the two prior calendar years had assets of less than $391 million. Intermediate Small Bank (ISB) – a bank that as of December 31 of both of the prior two calendar years had assets greater than $391 million and less than $1.564 billion as of December 31 of either of the prior two calendar years. Large Bank – a bank that as of December 31 of both of the prior two calendar years had assets greater than $1.564 billion. Limited Purpose Bank – a bank that offers only a narrow product line (such as credit cards or motor vehicles) to a regional or broader market and for which the designation as a limited purpose bank is in effect. Wholesale Bank – a bank 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 of wholesale bank is in effect..

[Audio] Opportunity Bank of Montana (OBMT) with assets of $2.071 billion as of 12/31/23 will transition to a Large Bank on January 1, 2024. CRA exams are conducted approximately every two (2) years (depending on the regulatory agency and prior rating). The LB Exam consists of three tests: The Lending Test (accounts for 50% of the final rating), the Investment Test and the Service Test.

[Audio] For the Large Bank Exam Lending Test: Data includes: HMDA, Small Business, Small Farm, Community Development, and optionally, Consumer Loans and Affiliate Lending. Components include: Lending Volume, Inside/Outside of Assessment Area Ratio, Geographic Distribution of Lending (lending to low- and moderate-income geographies), Borrower Distribution of Lending (lending to low- and moderate-income people and businesses and farms of different sizes), and Community Development Lending (volume and complexity and innovativeness)..

[Audio] The Large Bank Investment Test Considers Qualified Community Development Investments Volume, Innovativeness and Complexity of Qualified Investments, and Responsiveness of Qualified Investments to Credit and Community Development Needs.

[Audio] The Large Bank Service Test Considers Geographic Distribution of Retail Bank Branches, Record of Opening and Closing Retail Bank Branches, particularly those that serve LMI geographies and individuals, Availability and Effectiveness of Alternative Systems for delivering retail banking services in LMI geographies and individuals, Range of Retail Banking Services in each Geography Classification, Extent of Community Development Services Provided, and Innovativeness and Responsiveness of Community Development Services.

[Audio] Effective January 1, 2024, OBMT will begin collecting CRA loan data for the annual CRA reporting requirement. OBMT will file its first CRA Loan Register on March 1, 2025..

[Audio] The CRA exam has four possible ratings – Outstanding, Satisfactory, Needs to Improve and Substantial Non-Compliance The individual tests/sections within the exam have five possible ratings – Outstanding, High-Satisfactory, Low-Satisfactory, Needs to Improve and Substantial Non-Compliance.

[Audio] Opportunity Bank's last CRA Exam was performed by the Federal Reserve of Minneapolis on October 24, 2022. Our overall rating was outstanding, our lending test rating was outstanding, and our community development test rating was outstanding. The document that provides details of our exam rating is called the Performance Evaluation (PE). The PE of all institutions subject to CRA is public and can be found on the Internet or in the public file of the institution. You can find the 2022 OBMT PE document on the Source – 2024 CRA Public File Folder For a Large Bank with an Outstanding rating, a 2-year exam cycle is common, so we expect to have our next CRA exam Q1 of 2026. This exam will cover data collected in Q4 2022 through the next CRA exam date..

[Audio] Regardless of the size of the bank or the exam type, all CRA Exams include a Fair Lending Review. Failing the Fair Lending review is grounds for an automatic downgrade of at least one rating. Institutions have been downgraded in CRA over a single loan. A bank with a "needs to improve" or "substantial non-compliance" CRA rating generally cannot open or close branches, among several other constraints that remain in place until their next CRA exam..

[Audio] An institution is required to delineate one or more assessment areas which are evaluated when determining the bank's record of helping to meet the credit needs of its community..

[Audio] An assessment area: Must contain all of the geographies where the bank has its branches, deposit-taking ATMs, and has originated or purchased a substantial portion of its loans (including home mortgage loans, small business, and small farm loans). May not reflect illegal discrimination. May not arbitrarily exclude low- or moderate-income geographies taking into account the bank's size and financial condition. May not extend substantially beyond a Metropolitan Statistical Area (MSA) or State boundary unless it is a multi-state MSA (Montana does not have these). If a bank serves a geographic area that extends substantially beyond these boundaries, it will delineate separate assessment areas for those areas/states. There are five (5) MSAs in Montana: Great Falls (Cascade County), Missoula (Missoula and Mineral Counties), Billings (Yellowstone, Stillwater and Carbon Counties), Bozeman (Gallatin County) and Helena (Lewis & Clark, Jefferson and Broadwater Counties).

[Audio] Banks are not prohibited from conducting business (taking deposits, making loans, providing services, etc.) outside of its assessment area. During the exam, the ratio of lending inside and outside of the Assessment Area will be evaluated. The bank must have a "substantial majority" of its lending inside of this area. The bank can change the composition of its assessment area as needed, provided it meets the technical requirements under the regulation on the previous slide..

[Audio] Shown here is the map of Opportunity Bank of Montana's (OBMT) eleven Assessment Areas (AA) which includes five (5) Metropolitan Statistical Areas (MSA); Missoula (Missoula and Mineral Counties), Billings (Yellowstone, Stillwater, and Carbon Counties), Great Falls (Cascade County), Bozeman (Gallatin County), and Helena (Lewis and Clark, Jefferson, and Broadwater Counties) and six (6) standalone (AA); Non-MSA AA (Ravalli, Deer Lodge, Silver Bow, and Madison Counties), Fergus County AA, Northeast Region AA (Valley and Roosevelt Counties), Rosebud County AA, South Central Region AA (Park and Sweet Grass Counties), and Teton County AA. These AA reflect the Bank's primary market areas for banking needs and community services..

[Audio] The 2024 Assessment Area Map can be found on The Source and can be accessed in the Risk Mgmt/Compliance Department/Community Reinvestment Act (CRA) page/CRA Public File link. The CRA Public File also contains a list of Branch and ATM locations, Lists of Products, Services, Fees, Alternative Delivery Methods, and Branch Hours, 2022 and 2023 Loan to Deposit Ratios, 2023 Home Mortgage Disclosure Acta (HMDA) Notice, List of Open and Closed Branches as of 12/31/2023, Written Comments or Complaints about the Bank's CRA Performance, and the October 24, 2022 Community Reinvestment Act Performance Evaluation presented by the Federal Reserve Bank of Minneapolis. Also located on the Community Reinvestment Act (CRA) page is the CRA Compliance Program for OBMT. This folder includes OBMT CRA Self-Assessments, CRA Identified Organization and Employee Service Hours Tracking Forms, and supporting documentation and training materials regarding the Community Reinvestment Act..

[Audio] The bank's assessment area maps are one of the required documents in the public file. It must be accompanied by a list of census tracts that are included in the area. There are several other required documents as you can see in the image on the left. If someone requests a copy of the public file, all of these documents must be provided to them. The bank may not refuse to provide the public file if requested. The regulation allows the bank to charge a fee to make copies of the public file, but it is OBMTs practice to waive that fee (only one copy will be provided per request). The documents can also be provided electronically, if requested. Although not required by the regulation, if you are asked for the public file, you should notify the CRA Officer when it was requested, and when and to whom it was given, if known (requesters are not required to provide their identity)..

[Audio] Branches are required to post a Community Reinvestment Act Branch Notice in the branch lobby that includes information on how to request the CRA Public File. The Main Office is required to post a Community Reinvestment Act Main Office Notice in its lobby. It is recommended that you pause this training presentation and familiarize yourself with the location of this notice in the branch you are located in..

[Audio] Mary Beth Walsh is the CRA Officer. She is responsible for managing the Bank's CRA efforts including coordination of the CRA Exam and response to CRA-related complaints. She also researches and qualifies the Bank's Community Development activities. She authors a CRA Self-Assessment report annually and is provided to examiners in advance of the CRA exam. Questions concerning CRA-related complaints, the Public File, or Public Notice should be directed to Mary Beth Walsh, CRA Officer..

[Audio] HMDA Data is included in the CRA Exam and in the Fair Lending review that accompanies the exam. The Bank will be required to provide HMDA data collected and reported since the last CRA examination, which may include partial years. HMDA data is subject to a data integrity review and, if it does not pass, is subject to scrub and resubmission. Errors in HMDA reporting are also subject to civil-money penalties!.

[Audio] There are three loan types required to be collected for CRA - Small Business Loans, Small Farm Loans and Community Development Loans (CDL).

[Audio] Consumer Loans are not reported under CRA. Banks that wish to receive consideration for their consumer loans may elect to provide them at the time of the exam request. The bank may elect to report one or more category of the consumer loans at its choosing: Home Equity | Motor Vehicle | Credit Card | Other Secured Consumer | Unsecured Consumer *The examining agency may require an institution to provide consumer loan data for the CRA exam if it makes up a significant portion of the bank's lending portfolio. All data collected and provided for the lending test, including optional data, are subject to data integrity testing prior to the exam. The institution may be required to correct and resubmit data that does not pass the data integrity review. Optional data not passing the data integrity review may be corrected and resubmitted or excluded from the analysis, at the examiners option..

[Audio] For Small Business and Farm Loans, only originated and purchased loans are collected and examined for CRA. Field information required on each loan includes: Unique identifier Loan amount at origination Loan location (the geocode) Revenue indicator Loan type (Business or Farm) Date of origination or purchase Information on non-originated CRA qualified lending may be collected and analyzed for fair lending or other non-CRA purposes..

[Audio] When reporting small business and farm data, an institution reports one origination per loan, per year, unless an increase in loan amount is granted. Note: A demand loan that is reviewed on an annual basis should not be reported as a renewal because the term of the loan has not been extended. Renewals and Refinances of Community Development Loans are collected and reported the same as small business and farm data. Refer to the "2024 CRA Loan Renewals_Extensions_Modifications_Credit Limit Increases" document found on the Source..

[Audio] There are four categories of Community Development (CD) Loans, Investments and Services: Affordable Housing (including multi-family 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 size eligibility standards of the SBA's Development Company or Small Business Investment Company programs or have gross annual revenues of $1 million or less Activities that revitalize or stabilize Low- or moderate-income geographies, Designated disaster areas or Distressed or underserved nonmetropolitan middle-income geographies designated by the FED, OCC and FDIC..

[Audio] As part of the CRA exam, the Bank reports activities performed by its employees that qualify for Community Development Service credit. This means that services you provide to your community may qualify as a Community Development Service for CRA..

[Audio] A Community Development Service Has as its primary purpose community development (one of the four categories on the previous screen) Is related to the provision of financial services, which include credit, deposit, and other personal and business financial services, or services that reflect a board member's or an employee's expertise at the bank, such as human resources, information technology, and legal services; and Has not been considered in the evaluation of the Bank's retail banking services. During the CRA Exam, examiners evaluate these services pursuant to the following criteria: The extent to which the Bank provides community development services; and The innovativeness and responsiveness to available opportunities for community development services..

[Audio] For a service to qualify, you must be providing your expertise as a banker. This means that if you provide construction support for Habitat for Humanity, it won't count or CRA credit. It will count as good personal and corporate stewardship so you should provide any service to your community that you feel called to provide. It just may not qualify for CRA credit. Your "expertise as a banker" relates to your specific role with the Bank. A person in IT has a different expertise than someone in Accounting. Information on your Community Service activities and CRA-related service activities will be requested annually. If you are not sure whether an activity counts, please include it and let the CRA Officer make the final determination..

[Audio] Examples of Qualified CRA CD Services include: Serving on a Board of Directors Serving on loan review committees Assisting in marketing of financial services, including developing advertising and promotions, publications, workshops, and conferences Supplying financial services training for staff and management Contributing accounting or bookkeeping services Assisting in fundraising, including soliciting or arranging investments Providing services that reflect a financial institution's employees' areas expertise at the institution, such as human resources, information technology, and legal services Instructor for a financial education class or first-time homeowner's class.

[Audio] Examples of Services that may not qualify for CRA include: Being a member of your Parent-Teacher Association/Organization Being a member of the Lion's Club, Shiner's United Way or other similar organizations Coaching a youth sports team or working at the Special Olympics event Teaching at a religious organization Community clean-up or beautification Being a volunteer firefighter or other first responder Being an advocate for CASA or working at a shelter Making personal monetary donations to any organization Once again, please continue to provide and document these community services with our admiration of your dedication to your community. Let the CRA Officer make the final determination on the service's CRA eligibility..

[Audio] The Bank allows all employees 12 hours of paid volunteer leave* per calendar year (during normal working hours) to devote to volunteer efforts for community clubs and organizations such as Rotary, Kiwanis, Jaycees, United Way, and non-profit groups such as those designated as United Way agencies (i.e. Gallatin Valley Food Bank; Helena Food Share; Big Brothers/Big Sisters; RSVP-Retired Senior Volunteer Program; CASA-Court Appointed Special Advocate). Paid volunteer leave does not apply to school-related activities. Paid volunteer leave also does not apply to activities that are political in nature or held for a religious purpose. The 12-hour limit for paid volunteer leave does not apply to volunteering for company-sponsored events, such as the Festival of Trees and Spirit of Service. You are expected to communicate your request for volunteer leave and coordinate scheduling with your supervisor. Please consult the OBMT Employee Handbook for additional information..

[Audio] Do you have CRA-related questions? Please reach out to Mary Beth Walsh, CRA Officer at the contact information listed on the screen..