we are not yet a reporter but trying to get the hang of this.

we know we need to report the 1e1, 1e2, 1b, 3, and 4a.

my question is, we did a construction loan for a small business but we coded as 1a2 (other construction loans..)

so does this loan get left out of CRA reporting purely because the code isnt one of the five?

or can you point me in the direction of some good cra references

Yes. Construction loans are NOT reported, but you can code as type 9 and present during an exam.

Anything commercial that does not fall into the categories for small farm/small business can be assessed for possible community development reporting. The loans of course must have a community development purpose based upon the definitions in the reg.

Thanks for the quick response. was my initial ( 1e1, 1e2, 1b, 3, and 4a) correct in that if we have a loan coded any other way that we should just ignore for CRA or how does that work ususally work?

except of course for any loan that benefit lmi individuals we are doing our due diligence to get credit.

If your call coding is correct then yes, you won't have loans coded anything else in small business/small farm.

You will not include in the submission for small business/small farm, but if you have loans that would be small business but are primarily secured by residential real estate, you can code them as CRA Type 3 (Other Small Business) and present during an exam.

Also keep in mind that you do not report for both HMDA and CRA with 2 exceptions:

multifamily can also be community development
small business refinances that are covered for HMDA because of the broad HMDA refi definition can be small business (either type 3 if primarily secured by 1-4 family r.e. or type 1 if not primarily secured by 1-4 family r.e.).

Thank you very much, I really appreciate all the help on here Kathleen B.

I suggest that you stop focusing on schedule RC-C Part 1 and look at records coded for RC-C Part 2 which should contain all your reportable small business and small farm loans. Some items in RC-C Part 1 are not reportable because they are not small business loans even though they fall in items 1e or 4a. Since banks must code loans for Part 2 and that part of the Call report is intended to identify small business and small farm loans, that is where you should be looking to coordinate your Call Report with your CRA-reportable small business and small farm loans. As Kathleen says, if some small business loans are disqualified because they are secured by residential real estate (be careful to note the important change of "secured by real estate" adopted April 2009) you can code them as loan type 3 for CRA.

Is anyone else here amazed at how complicated this gets? You make loans that are truly helping a small business, but due to a technicality, you aren't allowed to report it but instead have to remember to give it another code to show the examiners and hope they allow it.

The instructions for HMDA and CRA reporting read like a bad foreign language translation of the rules for Fizbin.

Live long and prosper.

Except that the codes are what gets them over to that schedule.

As I tell banks..if you don't have them coded correctly you still have to refer to the call report definitions to see what qualifies for small business/small farm.

Re Bonnie, because of the tie to the call report it seems more complex than it really is. But if you focus on the definitions it is easier to understand.

Except that the codes are what gets them over to that schedule.

As I tell banks..if you don't have them coded correctly you still have to refer to the call report definitions to see what qualifies for small business/small farm.

I know Banks that have their call reporting down to a science and consequently their CRA reporting is also much easier...it is a subset by loan amount and date of origination of what is in the correct line items.

Re Bonnie, because of the tie to the call report it seems more complex than it really is. But if you focus on the definitions it is easier to understand.

See my comment at the top of the thread:

"If your call coding is correct then yes, you won't have loans coded anything else in small business/small farm."

If that is the case, then your loans are in the proper places on the call report including the schedule for small business/small farm.

All you have to do is pull a report of loans with those codes that have origination dates in the time frame being reported that are $1 million or less for small business or $500 thousand and less for small farm.

You are done.

If your call codes are not correct, a situation I see a lot, you need to get it right (a call report scrub can be mandated by regulators) and in the meantime refer to the definitions for the loans that fall into the small business/small farm loans for the call report...the codes discussed.

I frequently see letters of credit, construction loans, loans primarily secured by residential real estate, and so forth in the category for small business/small farm.

Pull a report with call codes, purpose codes, class codes, collateral codes and review. See if things make sense.

Oh I know that relying on the Call Report definitions created this mess because the Call Report priorities are COMPLETELY DIFFERENT that CRA priorities which is where, I believe, CRA gets off track because some examiners love to focus on nitty details instead of looking at the big picture.

One more thing - I think the weight that CRA places on housing is out of whack. CRA should, first and foremost, place an emphasis on job creation and RETENTION. Because without jobs, I don't care HOW affordable you try to make the housing, it is still UNSUSTAINABLE. But the problem is that CRA only focuses on "LMI" jobs which means we get a big fat reward for creating minimum wage jobs, but no recognition for jobs that offer upward mobility to LMI folks.

Not only that, but "middle income" jobs also provide stability for LMI folks since middle income people will buy goods and services that help provide employment for LMI people.

I wish I had an answer on how to realign the regulation to focus on what is really needed, but I'm too damn busy sorting through call codes and HMDA Action Taken codes and what not.

Can construction, land, farm land, unimproved land loans be coded as type9 and presented at exam time (not reported) if they are not community development loans.

Thanks

You mention farm land....those would be loans secured by farm land if $500,000 or less and be in the small farm category.

A bank might not do a lot of small business, small farm or residential mortgage lending. Regulators will determine what are your significant portfolios, but you can request that they assess your other portfolios (that you have geocoded and prepared for analysis) so that you can demonstrate how the bank is meeting credit needs in its assessment areas.

The bank has the choice of bringing any non-small business/small farm/community development loans into consideration for the examination.

The regulation mentions consumer loans as optional, but other types such as those you mentioned can also be brought in by the bank. I know banks that primarily do construction lending and that is a true need in their community. Consumer purpose loans will be coded with the CRA codes. The miscellaneous commercial (including letters of credit) or consumer mortgage modifications will be coded with CRA code 9.

In order for the loan to be reportable - in the "small farm category" does the loan (farm land) need to finance agriculture production and other loans to farmers OR if the loan is simply secured by farmland sufficient for it to be reportable?

A loan secured by farmland that is $500,000 or less is a small farm loan for CRA purposes regardless of what the loan is used for.

Same with a loan secured by nonfarm nonresidential real estate..purpose does not matter.

Purpose matters in the other call code categories (loans to farmers or to finance agricultural production and for small business, commercial and industrial loans).

Kathleen, what about loans that are renewed or extended during the reporting period? How would those be identified using the Call Report?

You need to pull reports from your system, with the proper codes, and the required dates and amounts...origination date/amount, renewal date/amount, etc. you have to determine how this data is stored by your system.