I'm looking to make a grant to NP for CD credit. I have already chosen the entity, but I was wondering what the agencies (OCC) expect? I can't seem to find any amount listed in the guidance.

We have $500MM in assets and are located in the NY metro area. We currently have 8 branches and at least 1 more coming.

Any opinions on what amount will be acceptable?

Do you have any other investments that are CRA eligible?

No. We are one the top SBA lenders and the majority of our CD credit comes from our 504 lending. However, after a really contentious examination, I think it's best to make a grant or two.

There is no magic number but you can review the exam reports of similar sized/similar/same regulator (if possible) profile banks in your region.

Decide what need you want to fill, determine your budget, select an organization, have them complete a questionnaire with the info you need to qualify the grant, and give them the $.

A lot depends upon how much you have in your budget to give. Look at the other banks...do you want to put all of your money in one group or spread to 2 or 3? The amount will help you decide that.

One or two small contributions won't get you to Satisfactory, in my opinion.... not in New York.

You need to read other similarly situated banks' CRA Public Evaluations and set goals against your peers' activities.

Here is the problem with looking at the other banks in my AA. They are all the money center banks. We cannot be compared to Citi, Chase, etc. I don't really know too many banks are size in our AA. Do the regulators have some kind of search function on their websites?

I agree with you Pale and I was hoping to get by with two-four grants, but anything more than that won't happen.

I sometimes get disconnected from the challenges of smaller banks ACB. If you can do a couple of contributions annually and not have a CRA exam for 3 years or so, then you will have something to show the examiners.

Perhaps there are some investment opportunities your CFO or finance people are aware of that would also be eligible for credit under the investment test. Your executive team may be more open if they could see a small return on the investment rather than just making contributions.

KB is right though, there is no magic thresshold, and the examiners will go to their graves saying they don't have a number in mind. What would your bosses say of a goal of 1% of net income? How about one-half of 1% if they throw you out the window at the suggestion of 1%?

I would start with the FDIC Deposit Share Market Report for your County or even better your assessment area
http://www2.fdic.gov/sod/sodMarketRpt.asp?barItem=2

Try and locate similarly situated banks.

From there I would go to the FFIEC CRA Examination Search to see if there is a recent Performance Evaluation for those institutions.
http://www.ffiec.gov/craratings/default.aspx

If you are employed by the bank indicated in your profile, this may be a good peer bank. http://www2.fdic.gov/crapes/2010/58167_100524.PDF

http://www2.fdic.gov/crapes/2009/19695_090601.PDF

Good Luck.

Also, don't forget about deposits in CDFIs or minority owned banks with a view to the "investment" being targeted to their affordable housing or other CRA qualified initiatives. Many small banks do that sort of thing.

The CD's etc are listed in their investments.

You will get some return on your money while management gets used to this idea of giving money away!

Does NY have anything like the NJ Bankers TICIC program, which creates community development lending opportunities that banks can participate in. They generally provide revitalization or low/mod income housing credit and the loans count as community development loans.

Tennis, thanks for the link to ESB. I totally forgot about them. While not in my immediate area, they are in my AA. They are very close to my current FI. The CEO is going to drop dead when he I tell him I need around $30M.

I'll have to check on that Kathleen. TBH, I prefer to do a grant, as I feel it is more beneficial.

Remember, the $30,000 cited in the PE was over an exam cycle 2007 - 2010, and not per year.

Understand...just wanted to throw out options small banks use in case you get stuck. They all work and some are more palatable to management than others. It is a tough pill for some to swallow.

KB, correct me if I am wrong, however an investment (purchase of stock)/deposit (CD) in a CDFI or minority owned bank will grant you CRA Investment Credit over multiple exam cycles (as long as you hold the stock/CD), while a grant/contribution/donation to a NP will gain you CRA Investment Credit only during the current exam cycle (when funds were donated). The examiners my not give you full credit for the investment in a CDFI in subsequent exams periods but they will give you some credit, as long as you hold the investment. In some respects an investment in a CDFI, is "more bang for the buck" when you are talking CRA.

I agree with ACBbank that a donation to a NP can be more benefitial to the community (depending on the NP's outreach in the community) and can be a better public relations move for a financial institution. In the community where we operate, financial institutions and other businesses make it a point to issue a press release when it makes a contribution to a NP. If that is how you operate, then a contribution to a NP may give you the most "bang for your buck" - one time CRA Investment Credit and good PR.

That is pretty much how it works - grants do not carry over..they are specific to the year they are donated. As a banker, I did grants to local NPs (we eventually evolved to having a few that we always supported with larger grants, held out some funds for emergency grants, and remaining funds for a small group of others who applied.) We were in an area where low mod housing was a critical need, so we had a big focus on that, but we supported other causes. We had a budget of about $250,000 a year for grants...the bank got great publicity and our directors were great about finding out about needs and would stop by my office with info. We also made investments (usually through funds and so forth) and of course CD loans. We were a small "large bank".

The bank got to where it actually enjoyed the CRA work and really tried.

I have worked with many small and ISB banks and they do get credit for investments/deposits in CDFIs etc. For investments in minority banks, they have been successful with targeted funds for specific purposes (like low income housing).

If you have the cash to invest in a CD fund, that can ease the record keeping burden.

Regulators have always said that performance context is everything in CRA, but that is especially true in the investment test. And the investment test is the toughest nut to crack for an examiner because there isn't any comparative information, like collected lending data or demographic information, against which to compare your bank's performance. What they really need from banks is some contextual information. So, here's what I suggest before you actually go and make some grant or investment just of the sake of trying to satisfy your examiners.

For your assessment areas, identify the most prominent community development entities at each level of government (city, county, state). I'll leave the number of entities to identify up to you, but I'd start with, say, 2 or 3 at each level. The entities might be either nonprofits, CDFI institutions, government housing authority, economic development corporation, etc. I think you'll get the idea.

Once you identify the entities, then you can find out what investment opportunities they offer. Maybe there aren't any. That's unlikely, but if it's the case, that's important contextual information for the examiners, as will whatever the level of opportunities turns out to be. Then you'll be able to decide where your money best serves your and the community needs, and either be able to partake in those opportunities, or have legitimate reasons why you were shut out (private placements?) AR.

We actually do have some options open to us. The problem lies in the fact that Management is looking for something in writing which basically states "You'll be ok if you give X amount." I'm aware that this doesn't exist.

I've tried going the peer comparison route, but all I get is a number of reasons why our peers can allocate more funds than us. I know its nonsense, but that's the issue at the moment.