Agency Information Collection Activities; Proposed Collection: Comment Request; Bank Enterprise Award Program Application

ACTION:

Notice and request for public comment.

SUMMARY:

The U.S. Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act (PRA) of 1995. Currently, the Community Development Financial Institutions Fund (CDFI Fund), U.S. Department of the Treasury, is soliciting comments concerning the Bank Enterprise Award Program (BEA Program) Application, for the fiscal year (FY) 2020-FY 2022 funding rounds (hereafter, the Application or Applications).

DATES:

Written comments must be received on or before December 16, 2019 to be assured of consideration.

ADDRESSES:

Submit your comments via email to Mia Sowell, BEA Program Associate Program Manager, CDFI Fund, at bea@cdfi.treas.gov, or by facsimile to (202) 508-0089. Please note that this is not a toll free number.

FOR FURTHER INFORMATION CONTACT:

Mia Sowell, BEA Program Associate Program Manager, CDFI Fund, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220 or email to bea@cdfi.treas.gov.

SUPPLEMENTARY INFORMATION:

Title: BEA Program Application.

OMB Number: 1559-0005.

Abstract: The purpose of the Bank Enterprise Award Program (BEA Program) is to provide an incentive to Federal Deposit Insurance Corporation-insured (FDIC-insured) depository institutions to increase their lending, investment, and financial services to residents and businesses located in economically distressed communities, and provide assistance to Community Development Financial Institutions (CDFIs) through grants, stock purchases, loans, deposits, and other forms of financial and technical assistance. The CDFI Fund will make awards through the BEA Program to FDIC-insured depository institutions, based upon such institutions' demonstrated increase of qualified activities, as reported in the Application. The Application will solicit information concerning: Applicants' eligibility to participate in the BEA Program; the increase in total dollar value of applicants' qualified activities; impact of qualified activities; and appropriate supporting documentation. The questions that the Application contains, and the information generated thereby, will enable the CDFI Fund to evaluate applicants' activities and determine the extent of applicants' eligibility for BEA Program awards.

Current Actions: Extension without change of currently approved collection.

Type of Review: Regular.

Affected Public: Businesses or other for-profit institutions, non-profit entities, and State, local and Tribal entities participating in CDFI Fund programs.

Estimated Number of Respondents: 125.

Frequency of Response: Annually.

Estimated Total Number of Annual Responses: 125.

Estimated Annual Time per Respondent Including Optional Questions: 20 hours.

Estimated Total Annual Burden Hours: 2,500.

Requests for Comments: Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval. All comments will become a matter of public record and may be published on the CDFI Fund's website at https://www.cdfifund.gov . The CDFI Fund is seeking: (a) Specific input on the BEA Program Application; and (b) general input on other BEA Program-related topics and considerations. Commentators should ensure that their comments are clearly labeled in order to distinguish those related to: (a) The BEA Program Application or, (b) other BEA Program related topics and considerations. The Application may be obtained on BEA page of the CDFI Fund's website at https://www.cdfifund.gov/programs-training/Programs/bank_enterprise_award/Pages/apply-step.aspx#step1 .

Commentators are encouraged to consider, at a minimum, the following topics:

A. BEA Program Application

Comments concerning the Application are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services required to provide information.

In addition, the CDFI Fund requests comments in response to the following general questions about the BEA Program Application:

1. Is the data and information that is proposed to be collected by the BEA Program Application necessary and appropriate for the CDFI Fund to consider for the purpose of making award decisions?

2. In general, does the data and information requested in the BEA Program Application allow an applicant to demonstrate its lending, investment and service activities in BEA Program Distressed Communities or to CDFIs?

3. Are certain data fields, questions or tables redundant or unnecessary?

4. Should any data fields, questions or tables be added to ensure collection of relevant information?

5. Are there any data fields, questions or tables that are particularly difficult or burdensome to answer? If so, please be specific as to which questions or tables and describe why they are difficult or burdensome.

A. Other BEA Program-Related Topics and Considerations

The following section includes topics and considerations that are not related to the FY 2020 BEA Program funding round or Application. Commentators should clearly distinguish their comments related to this section when providing their responses.

1. Financial Health

The CDFI Fund considers the safety and soundness of BEA Program Applicants in making award decisions. Through Memorandums of Understanding with federal regulators, the CDFI Fund obtains safety and soundness information directly from the Federal Reserve Board, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The CDFI Fund is considering requiring Applicants to report on their safety and soundness by requesting that they provide information on their most recent independent audit, their most recent Community Reinvestment Act (CRA) Rating, and information on any enforcement actions. The collection of this information from Applicants would be used to consider an Applicant's eligibility. Applicants will be deemed ineligible if any of the following are noted: Enforcement actions with material concerns or Prompt Corrective Actions, CRA assessment ratings below “Satisfactory”, or the most recent independent audit report with any of the following: Going concern opinion; an adverse opinion; a disclaimer of opinion; or withdrawal of an opinion.

a. How much of a burden will the collection of this information be for Applicants?

b. Are there any reasons that the CDFI Fund should not request this information from Applicants? If yes, please describe.

c. Is there anything else the CDFI Fund should consider? If yes, please describe.

2. BEA Program Categories, Subcategories and Qualified Activities Definitions

The BEA Program defines the Qualified Activities, Categories and Subcategories in the BEA Program Interim Rule dated August 10, 2016 (12 CFR 1806). These definitions have been provided as Appendix 1: BEA Program Category, Subcategory and Activity Type Definitions.

a. New Qualified Activities

(1) Are there any loan, investment or service activities not currently considered BEA Program Qualified Activities that the CDFI Fund should consider adding? If so, indicate what the activity is, describe it, and explain why the CDFI Fund should consider it. Also, describe the benefits of the activity to CDFIs, residents or businesses in Distressed Communities.

(2) The CDFI Fund does not currently have a specific Qualified Activity type for working capital or equipment loans. These types of loans are typically reported as Small Business Loans if the borrower meets the size eligibility standards. Should the CDFI Fund consider introducing a new Qualified Activity type specifically for working capital or equipment loans for businesses located in Distressed Communities that do not meet the criteria for a Small Business Loans? Please explain why or why not.

(3) The CDFI Fund does not currently have specific guidance for reverse mortgages. A reverse mortgage is a mortgage loan available to homeowners 62 years of age and older, usually secured over a residential property that enables the borrower to access the unencumbered value of the property for cash. Should the CDFI Fund consider introducing reverse mortgages as a new Qualified Activity type or consider revising the definition of Affordable Housing Loan to include reverse mortgages? Please explain why or why not.

b. Existing Qualified Activities

(1) Are there any loans, investments, or service activities that are currently considered BEA Program Qualified Activities that the CDFI Fund should consider updates to the definition? If so, indicate the Qualified Activity and explain why the CDFI Fund should consider revising the definition.

(2) Are there any loans, investments, or service activities that are currently considered BEA Program Qualified Activities that the CDFI Fund should consider eliminating? If so, indicate which activity it is and explain why the CDFI Fund should consider eliminating.

(3) In FY 2016, the CDFI Fund included Small Dollar Consumer Loans as a BEA Qualified Activity. Small Dollar Consumer Loans are defined as affordable consumer lending products that serve as available alternatives in the marketplace for individuals who are Eligible Residents who meet Low-and-Moderate income requirements and meet criteria further specified in the applicable NOFA. The FY 2016-2018 NOFAs indicate that Small Dollar Consumer Loans have a total principal value of no less than $500 and no greater than $5,000. Is this dollar range still relevant for this product? If no, please provide a dollar range based on your organization's experience offering this product and explain why the CDFI Fund should consider updating these amounts.

(4) For Small Business Loans which are Qualified Activities in the Commercial Loans and Investments sub-category of the Distressed Community Financing Activities category, the CDFI Fund instructs Applicants to use the size eligibility standards adopted by the U.S. Small Business Administration's Development Company or Small Business Investment Company programs (13 CFR 121.01) for determining whether a loan to a borrower is eligible to be reported as this Qualified Activity. Is there any other criteria the CDFI Fund should consider for determining whether a loan to a borrower is eligible to be reported as a Small Business Loan? If yes, please describe the criteria and explain why the CDFI Fund should consider it.

(5) The CDFI Fund currently values the administrative cost of providing certain Financial Services using the following per unit values:

• $100.00 per account for Targeted Financial Services including safe transaction accounts, youth transaction accounts, Electronic Transfer Accounts and Individual Development Accounts;
• $50.00 per account for checking and savings accounts that do not meet the definition of Targeted Financial Services;
• $5.00 per check cashing transaction;
• $50,000 per new ATM installed at a location in a Distressed Community; and
• $500,000 per new retail bank branch office opened in a Distressed Community, including school-based bank branches approved by the Applicant's Federal bank regulator.

Should the CDFI Fund consider updates to the valuation of these administrative costs? If so, indicate the Financial Service, suggested value, and explain why the CDFI Fund should consider revising the value.

3. Impact of Program Related Loans, Investments and Service Activities

The CDFI Fund is considering adding the following text entry fields in order to improve the quality of impact data collected in the BEA Program Application. This information will allow the CDFI Fund to standardize and effectively report quantitative and qualitative social impacts of program related investments.

• Business Description: Applicants will be required to provide a brief description of the entity or business that received the loan or investments. For example, for Commercial Loans and Investments, if an Applicant provided a commercial real estate loan to a widget manufacturing business so that it could purchase a warehouse in a distressed community, the Applicant would describe the business, using this text entry field as `Commercial Real Estate Loan to Widget Manufacturing Business for Warehouse Purchase.' If implemented, there will be character limits and the CDFI Fund will provide additional examples.
• Impact: A further description of the impact of the loan, investment or service activity would be required. This will help to contextualize the numerical impact data currently collected. Currently, applicants are only required to provide numerical impact information for certain activity types. This new text entry field would add a picklist or text entry box which would depend on the activity type. Refer to Appendix 2: Impact Reporting Enhancements for examples of impact as it relates to specific BEA Qualified Activities.

a. Will reporting this information significantly increase the number of hours spent completing the BEA Program Application?

b. Are there any reasons that the CDFI Fund should not collect this information?

c. Is there any additional information or data that demonstrates the impact of program related investments that the CDFI Fund should consider?

4. Affordability of Program Related Loans and Investments

The CDFI Fund is considering adding the following fields to collect basic information on the affordability of financial products reported to the CDFI Fund in the BEA Program Application for award consideration. This data will be used to perform future analyses to better understand the affordability of program related lending and may inform future policy considerations. For BEA Qualified Activities that are loans, Applicants will be asked to provide:

• Interest Rate, Interest Type, and Term: Applicants will input the interest rate, select the interest type as either `Fixed' or `Variable,' and provide the Term as the number of months. These fields will provide important insight into the pricing and terms offered to borrowers that receive loans from BEA Program Applicants.
• Origination Fees and Points: Applicants will input this numerically as basis points. This field will help the CDFI Fund to better understand the overall cost of loans made by BEA Program Applicants.

a. How much of a burden will the collection of this information be for Applicants?

b. Are there any reasons that the CDFI Fund should not collect this information?

For all BEA Qualified Activities:

c. Is there any additional information or data that demonstrates the affordability of program related loans or investments that the CDFI Fund should consider?

5. Award Selection Process

Section 1806.404(b), (c), and (d) of the Interim Rule describes the award selection process if insufficient funds are available to cover estimated awards for which Applicants are eligible, priority of awards, and calculating actual award amounts. Applicants are ranked based on whether the Applicant is a CDFI or a non-CDFI, and prioritized in each category of BEA Qualified Activities. Currently, one overall maximum award amount has been determined for an Applicant's single BEA Program award, despite the number of categories the Applicant is eligible to receive an award for. Award selections within each BEA category are based on an Applicant's relative ranking within each such category, subject to the availability of funds and any established maximum dollar amount of total awards that may be awarded for the Distressed Community Financing Activities category of Qualified Activities, as determined by the CDFI Fund.

a. Award Amount

(1) Should the CDFI Fund consider awarding eligible applicants who successfully demonstrate increases in more than one BEA category a higher single BEA Program award amount than Applicants who demonstrate an increase in one BEA category, if eligible for the maximum award amount? If yes, explain what should be considered in determining the proportion of the increased award amount. If no, explain why not.

(2) Should the CDFI Fund establish a maximum dollar amount that may be awarded for the CDFI Related Activities category? Explain why or why not.

(3) Should the CDFI Fund establish a maximum dollar amount that may be awarded for Distressed Community Financing Activities category? Explain why or why not.

(4) Should the CDFI Fund establish a maximum dollar amount that may be awarded for the Service Activities category? Explain why or why not.

(5) Should the CDFI Fund determine actual award amounts by a method other than the existing formulaic award calculation? If yes, please describe the method and note what benefits are offered to Applicants, residents and businesses in Distressed Communities, and/or US taxpayers by implementing this method. Also, indicate if/how the method addresses the following factors noted in Section 1834a(h)(1)(C). of the BEA Statute: Degree of difficulty in carrying out activities, community impact, degree of innovative methods for meeting community needs, leverage of qualified activity amounts, total asset size of the Applicant, new entrance to providing services in a Distressed Community, need for subsidy, and extent of distress in a community.

b. Award Calculation

The estimated BEA Program award calculation is the year-over-year increase in Qualified Activities from the Baseline to the Assessment Period prioritized based on CDFI certification status and CRA asset size, and multiplied by an award percentage based on the Category, Sub-category and Qualified Activity type.

(1) Is there any additional criteria that the CDFI Fund should consider in the estimated BEA Program award calculation?

6. Persistent Poverty Counties

The CDFI Fund is considering prioritizing awards to Applicants that invested in Persistent Poverty Counties during the Assessment Period (this will be determined by transactions submitted in the application that are in Persistent Poverty Counties). The CDFI Fund would potentially implement this by using the Address and Census Tract to determine if BEA Qualified Activities submitted in the application were made in a Persistent Poverty County. This will be used either separately or along with Persistent Poverty County commitment information currently collected in Table 8: Projected Use of BEA Program Award to prioritize awards or increase award amounts to Applicants will that serve Persistent Poverty Counties with their BEA Awards.

a. Are there are any reasons that CDFI Fund should not use this information to prioritize awards or increase award amounts to Applicants that serve Persistent Poverty Counties?

b. Is there anything else the CDFI Fund should consider when determining how Recipients can serve Persistent Poverty Counties?

7. Integral Involvement

The Interim Rule defines CDFI Support Activity as assistance provided by an Applicant or its Subsidiary to a certified CDFI that meets the Integral Involvement criteria set forth by the CDFI Fund in the applicable NOFA. Commenters should note that Integral Involvement is a statutory program requirement.

The NOFA defines Integrally Involved as:

• Scenario I: Having provided at least 10% of the number of its financial transactions or dollars transacted (e.g., loans or equity investments) in one or more Distressed Communities in each of the three calendar years preceding the date of the applicable NOFA; or 10% of the number of its Development Service Activities or value of the administrative cost of providing such services in one or more Distressed Communities in each of the three calendar years preceding the date of the applicable NOFA;
• Scenario II: Transacted at least 25% of the number of its financial transactions or dollars transacted (e.g., loans or equity investments) in one or more Distressed Communities in at least one of the three calendar years preceding the date of the applicable NOFA or transacted at least 25% of the number of its Development Service Activities or value of the administrative cost of providing such services in one or more Distressed Communities in at least one of the three calendar years preceding the date of the applicable NOFA;
• Scenario III: Demonstrating that it has attained at least 10% of market share for a particular product in one or more Distressed Communities in at least one of the three calendar years preceding the date of the applicable NOFA;
• Scenario IV: At least 25% of the CDFI Partner's physical locations (e.g., offices or branches) are located in one or more Distressed Communities where it provided financial transactions or Development Service Activities during the one calendar year preceding the date of the NOFA.

a. Should the current definition of Integrally Involved be revised or replaced? If so, how should the CDFI Fund define Integrally Involved?

b. Are there any other factors the CDFI Fund should consider when determining an updated definition of Integrally Involved?

Authority: 12 U.S.C. 1834a, 4703, 4713, 4717; 12 CFR part 1806.