Preserving Minority Depository Institutions - July 2017

The Board submits this report pursuant to section 367 of the Dodd-Frank Act. Section 367 of the Dodd-Frank Act requires the Board to submit an annual report to the Congress detailing the actions taken to fulfill the requirements outlined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989, as amended by the Dodd-Frank Act in 2010. In addition to the annual reporting requirement, FIR-REA section 308 requires the Federal Reserve System (System) to devote efforts toward preserving minority ownership of minority depository institutions (MDIs). Comments on the System’s efforts to fulfill the requirements of FIRREA section 308 are included in the 2008 through 2012 annual reports of the Board to the Congress. Beginning with the 2013 report, the Federal Reserve issues the annual report in separate form to align Board practice with that of the other agencies with section 367 responsibilities. The System’s Partnership for Progress (PFP) program was established in 2008 because the System recognized the importance of MDIs and wanted to independently take steps to preserve and promote these institutions. The System supports an inclusive financial system and understands the challenges inherent in providing access to credit and other financial services in traditionally underserved areas. As such, the System remains committed to identifying additional opportunities to support the preservation of these organizations. At the beginning of 2016, the System supervised 17 MDIs, which collectively represented approximately 2 percent of the 803 community banks in the System’s community banking organizations portfolio. In the fourth quarter of 2016, one institution changed charters bringing the System’s number of MDIs supervised to 16. To support these institutions and to accomplish minority depository-related FIRREA goals, the System continues to dedicate resources to engage in outreach and technical assistance activities. Throughout 2016, staff from the Board as well as PFP-dedicated staff from each of the 12 Federal Reserve Banks (FRBs) engaged in activities to support MDIs. Highlights of those activities included collaborating with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) in planning the 2017 biennial interagency conference to help promote and preserve MDIs; providing technical assistance to MDIs on a wide variety of topics, including topics focused on IT and cybersecurity, interest rate risk, regulatory updates, capital planning and capital rules, BSA/AML issues, commercial real estate concentrations, third-party vendor management, CRA, and regulatory application processes; facilitating outreach to MDIs through district coordinators at each Reserve Bank to include individual meetings, conference calls, and roundtables; maintaining a public website, which provides a full menu of banking resources—including regulatory guidance—relevant to MDIs.