[Angie Cowell]

We have made some investments in a county within our Assessment Area for water and sewer development. Does anyone know if we will get credit for this during our FDIC CRA exam? Just wondering if anyone has made the same type of investment and if it counted. Thanks for any insight.

Topic

[rcooper]

Hopefully we’ll get some FDIC banks to chime in, but until then I’ll give it a shot…

I think it certainly is a good possibility. The FRB of Philidelphia issued a publication a few years ago that gives an example of municiple bonds which were used to support local infrastructure part of which included local utilities. It’s available here on p. 18: https://www.philadelphiafed.org/-/media/egmp/images/publications/banks-community-reinvestment-act-opportunities/banks-community-reinvestment-act-opportunities.pdf.

And the Interagency Questions and Answers discusses qualified investments… you’ll find what I think is applicable content on p. 11: https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/documents/11/xi-12-1.pdf. See below.

” __.12(t) – 2: Are mortgage-backed securities or
municipal bonds “qualified investments”?

A2. As a general rule, mortgage-backed securities
and municipal bonds are not qualified investments because
they do not have as their primary purpose community
development, as defined in the CRA regulations. Nonetheless,
mortgage-backed securities or municipal bonds designed
primarily to finance community development generally are
qualified investments. Municipal bonds or other securities
with a primary purpose of community development need not
be housing-related. For example, a bond to fund a community
facility or park or to provide sewage services as part of a plan
to redevelop a low-income neighborhood is a qualified
investment.“

[Author]

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