My bank has some funds to invest. Aside from buying loans what else can we do that would be for CRA credit. Someone said purchasing mortgage backed securities????

That would work. You find the brokers that package loans from LMI census tracks or LMI borrowers and buy those, or invest in with a firm that will provide evidence that your investment purchased participations in these types of MBS.

With the mess Florida is in, there must be many CD opportunities for years to come down there....

Another question. I was looking in CRA to the LTD ratio and what is considered adequate. Is there any guidance on that? We are a small bank. Also is there any guidance on how much of our new loan portfolio has to be in our AA. I know it says the majority. Does that mean 51%. Also we have to originate and/or purchase loans in our AA to get a satisfactory. It cannot just be based on investments.

here is my 2 cents Rosebud, hopefully you will get additional responses to fill in some of the gaps since I am ignorant of small and intermediate banks:

LTD ratio - I think this is calculated by state. So you can compare your bank to the state ratio. Also look at some of your competitor's LTD ratios from the public performance evaluations available from your primary regulator's website.

in and out ratio - Do not fall below 51%, it is majority

I am not clear on your last question. Originated, refi's and purchased loans are all counted in the loan test. And the lending test is 50% of the overall CRA performance rating.

When you say "based on investments", you are not refering to the investment test, are you?

hang on, and let's see what some of the CRA gurus that know the small and intermediate size banks guidelines say....

When calculating the LDT ratios do you exclude the loans sold, for example to FHLB, Freddie etc.? (We sell the loans 100% but retain the servicing.)

You should calculate your loan to deposit ratio without the sold loans but, if a significant amount, do a second calculation with them included. The adjusted number is part of your performance context...you made the loans and are benefiting your community, therefore should receive credit for them in the exam.

Thanks Kathleen.