I have been thoroughly reviewing the OCC and FDIC NPR and preparing for webinars we will be broadcasting next week about the NPR. Here are a few observations (and there are many, many more I will expound upon next week)

1) One of the dramatic aspects of the proposal that has not received much if any comment so far is that the regulation would require banks to annually self-assess and rate their own performance and the regulators will validate the performance ratings reported by banks. Banks annually would self report their performance evaluations using the values and formulae published in the regulation. This transfers the CRA evaluation to banks and increases the frequency of reported performance ratings from every 3-5 years to an annual practice subject to periodic on-site evaluation. Putting aside the complex formulae developed for the various CRA tests to be applied, self-assessing performance should appeal to banks all other things being equal.

2) Another very different requirement is that loans outstanding (only loan balances, not loan count) will be evaluated rather than the value of loans originated during any given year. This would apply to the "CRA Evaluation Measure" (At the same time, however, under the so-called "distribution tests, only the count of loans originated or purchased will be evaluated). This is a very dramatic departure from the current practice. The rationale is that measuring loan balances (rather than loan dollars originated) will provide a much longer perspective whereas the current practice of looking at activity within a short period of time (1 year) can distort the true picture because of the compressed time period. This is an interesting idea, although it does introduce more complexity to the measurement of CRA performance.

We already rate our own performance based on a self-assessment by market, updated monthly. So 1) above is a non-event. Not sure how 2) impacts us,

With regard to the loan balances, I do see an issue with lines of credit. At my prior bank a number of our CD loans were lines of credit. At any given time there may, or may not, have been an outstanding balance. It really depended on cash flow and business activity. I see an issue with reporting the balance at year end as it might not reflect the true value of the CD support.
OR am I reading it wrong??

First, it's great that you are self assessing your performance every month, but the NPR will require you to use data that is very different from what you use now and also has tests that are based on new formulae not currently used. So this will be a big change, even for banks that are self assessing.