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#1473683 - 11/30/10 04:08 PM CD loans - again!
Trees Offline
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Of course I am getting a lot of pushback from the Comm. lenders to assist in identifying their loans for CRA purposes. I reviewed the last examination questionnaire. It says to identify loans.....which fit one of the 4 community development definitions. I believe we are talking about: affordable housing; community services, activities that promote...and activities that revitalize...
Correct me if I am wrong.

The lenders are focusing on the dollar amt. of revenues. In some docs. I have I am seeing a reference of revenues of $1 million or less. I am thinking this is just one group of loans and not the only factor to be considered.. Please clarify/confirm this. Thanks!!
Last edited by Trees; 11/30/10 04:08 PM.
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CRA
#1473686 - 11/30/10 04:13 PM Re: CD loans - again! Trees
Kelsey D Offline
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Ohio
The size of the business only comes into play for activities that promote economic development by financing small businesses or farms that meet the size eligibility standards of the Small Business Administrationís Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less.

Size is irrelevent under the other three bullet points in the definition.
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#1473690 - 11/30/10 04:16 PM Re: CD loans - again! Kelsey D
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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They also might be confusing identification of small business/small farm loans with CD loans. Size of loan and annual revenue are factors in that reporting category.
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HMDA/CRA Training/Consulting/Mapping
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#1473706 - 11/30/10 04:27 PM Re: CD loans - again! Kathleen O. Blanchard
Kelsey D Offline
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Ohio
The loan amount is what determines if a loan is reported as a small business or small farm loan. The revenue category is reported for small business and small farm loans, but it is not a factor in determining whether or not it is reported. All of this, of course, is only applicable to banks opting for the large bank test.
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#1473813 - 11/30/10 06:02 PM Re: CD loans - again! Kelsey D
Trees Offline
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Kelsey D: We are a small intermediate and the examiners did request the loan info....I don't understand your point about applicable to large bank test.....

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#1473860 - 11/30/10 06:58 PM Re: CD loans - again! Trees
Kelsey D Offline
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Ohio
I apologize for not clarifying. Only large banks have to report small business and small farm loans on the CRA LAR. Examiners will still ask to look at loan data regardless of which way you are examined. But remember, large banks cannot count a small business loan as a community development loan, whereas an ISB can. Small business loans are determined by loan amount, not by revenue size.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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#1473926 - 11/30/10 08:10 PM Re: CD loans - again! Kelsey D
Trees Offline
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Great, thanks for the clarif.

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#1473956 - 11/30/10 08:34 PM Re: CD loans - again! Trees
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Regulators consider whether the bank is making the majority of its "small business" loans to businesses with revenue of $1MM or less or to those of > $1MM (small loans to small businesses or small loans to big businesses).

It most certainly can affect a rating if the majority of the loans are coded 2. Also, coding them 3 throws them out of consideration for type 1.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#1473988 - 11/30/10 08:52 PM Re: CD loans - again! Kathleen O. Blanchard
Kelsey D Offline
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Posts: 516
Ohio
Originally Posted By: MS Kaybee
Regulators consider whether the bank is making the majority of its "small business" loans to businesses with revenue of $1MM or less or to those of > $1MM (small loans to small businesses or small loans to big businesses).


I definitely agree with you. My point was just that the revenue size is not a factor when determining if it is a small business or small farm loan, and back to the original question, it's only a factor for identifying community development loans when using the "promoting economic development" portion of the definition.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.

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