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#1494658 - 01/13/11 05:14 PM
Help Needed ASAP
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100 Club
Joined: Sep 2009
Posts: 213
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I have been assigned the task of quantifying what the Bank needs to do in the lending test and community development test (we are an ISB) to ensure a satisfactory rating. Are there any hard and fast rules as to what amount of the bank's lending should be done in low and moderate income geographies, number and dollar amount of community development loans, number and dollar amount of qualified investments, etc. It has been my experience that CRA exams are subjective, but management wants numbers nailed down. Any guidance is appreciated.
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#1494712 - 01/13/11 05:36 PM
Re: Help Needed ASAP
Kathleen O. Blanchard
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Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
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As far as lending to LMI people and in LMI areas, it's good to look at the demographics in your area. If 10% of the households in your assessment area are considered LMI, you would strive to have at least 10% of your household loans to LMI people. Similarly, if 10% of the households in your assessment area are located in LMI census tracts, hopefully 10% of your loans are in those census tracts.
I use demographic data regarding the geographic distribution of small businesses, small farms, owner-occupied units, and households, to analyze the geographic distribution of our small business loans, small farm loans, mortgage loans, and consumer loans, respectively. Here I'm analyzing the location of our customers, regardless of their borrower characteristics.
Similarly, I compare the demographic data of our customers to that of the entire assessment area to analyze who we are lending to, regardless of where they are located.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.
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#1494725 - 01/13/11 05:51 PM
Re: Help Needed ASAP
Kelsey D
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Diamond Poster
Joined: Oct 2004
Posts: 2,126
Connecticut
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As Kelsey has stated examiners use demographic data to compute your performance standards. They also use the reported lending experience of lenders reporting under HMDA and CRA to compute "penetration rates" in the LMI tracts and to LMI borrowers and very small businesses. It is relatively easy to compute quantitative performance standards. You can get the information for free from the FFIEC (although the formatting is not the best) or from commercial sources such as GeoDataVision.
_________________________
CRA Exam Preparation, CRA Performance Evaluations, Key Performance Benchmarks, & maps
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#1494798 - 01/13/11 06:40 PM
Re: Help Needed ASAP
Len S
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100 Club
Joined: Sep 2009
Posts: 213
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Len S,
Where on the FFIEC website would I look for this information?
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#1494849 - 01/13/11 07:05 PM
Re: Help Needed ASAP
BNKO
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Diamond Poster
Joined: Oct 2004
Posts: 2,126
Connecticut
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CRA data products HMDA data products Census data
_________________________
CRA Exam Preparation, CRA Performance Evaluations, Key Performance Benchmarks, & maps
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#1498926 - 01/21/11 11:39 PM
Re: Help Needed ASAP
Kathleen O. Blanchard
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Platinum Poster
Joined: Mar 2006
Posts: 777
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Does one review other institutions through their performance evaluation?
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#1499016 - 01/24/11 02:22 PM
Re: Help Needed ASAP
Newbie06
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Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
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Does one review other institutions through their performance evaluation? Yes, but I ususally just end up frustrated when I see that the competition down the street receives better ratings with a fraction of the effort we put forth. We'd be outstanding if we were examined like them.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.
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#1499037 - 01/24/11 02:41 PM
Re: Help Needed ASAP
Kathleen O. Blanchard
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Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
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I will have to do that next time. Here's my case in point...
Them: $2 billion in assets lending data comparable no CD loans $250 thousand CD investments reasonable CD services
Us: $750 million in assets lending data comparable $7.9 million CD loans $2.4 million CD investments reasonable CD services
We both received a high satisfactory in lending, low in investments, and they received a high in services while we had a low. Unacceptable, given the fact that they are more than twice our size and in the same markets.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.
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#1499054 - 01/24/11 02:55 PM
Re: Help Needed ASAP
Kathleen O. Blanchard
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Platinum Poster
Joined: Aug 2006
Posts: 516
Ohio
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Unfortunately, both of our PEs were published at the same time, so it wasn't until after the fact that I realized how differently we were examined. I will definitely be more prepared next time with peer data.
_________________________
Don't make me say, "I told you so!" Sincerely, your friendly Compliance Officer.
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