So, do intermediate small banks still collect data through 9/1/05 and still submit it next March?

-Jokerman

Great minds think alike! Based on the revised definition, it looks like it would be immediately.

Since the press release indicates interim CRA examination procedures for intermediate small banks will be in place by August 1, this should happen immediately and I suspect the data collected is moot and is for your use only. I'd verify that before I'd hit the delete button, but I also wouldn't spend hours on the collection of today's data.

We've got the Fed coming in next week to do HMDA and CRA data verification prior to a September exam - we're hoping that since interim exam procedures are in place Aug 1 that they'll cancel the CRA data verification next week as useless waste of their time, but we're waiting to hear back from them this afternoon - I'll post the response we get. And here's hoping!!!

We are a small bank now having assets less than $250 million, however, if our assets increase to $250 million and < $ 1 billion would we then be considered an intermediate small bank and be evaluated for bank lending activity in the public CRA perforamnce evaluation and evaluated under the two separately rated tests?

The definition states:
Intermediate small bank means a small bank with assets of at least $250 million as of December 31 of both of the prior two calendar years and less than $1 billion as of December 31 of either of the prior two calendar years.

That sums it up.

Just hear from the Fed - they asked that we remove all CRA data from the disk they're picking up this afternoon, no CRA data verification, and we now won't have a CRA exam until sometime in 2006.

On that note, let the party begin!

What are banks expected to produce to get a satisfactory rating for the community development test? My last exam was in January '05 and in that exam we could not do enough for the examiners under CD to get them off our case. I hope were not jumping out of the fire and back into the pan with this change, albeit its been a long time coming.
Finally!!

I've echoed that sentiment a while back. We don't know enough on whats expected yet to judge. Based on the fact that most banks have not reported any, or less than 2 or 3 CD activities, whats a passing grade going to take. Have you read about the targeted census tracts where economic development is needed the FFIEC will be posting.

IMO reporting was the least of the problem. Its hard to imagine examiners will not ask for data prior to an exam which would mean you may not have to collect it for reporting, but you still may need to supply some type of CRA data for an exam.

That's what I am thinking, too. If they are still going to measure borrower and business income and "geographic distribution" then the data should be accurate. Scrubbing is what takes the time! I wonder if, in these intermediate exams, if the geographic distribution is just a general assessment area penetration, or will include lending to low-mod tracts.

I am not feeling the relief yet. Reporting was the easy part for us. Did not require much scrubbing. But, when it came to community development loans, I really had to do some digging to find any. I did see the list that many banks do not report any CD loans(made me feel better). Now what?

I'm going to hold off on my Editorial until more information is available but gosh is this another way to do some governmental social engeniering? Its hard to imagine that all the weight given to Sm Business/Farm and loans to LMI tracts and individuals is going away overnight

This reg didn't intend to leave out small bus/farm lending and loans to LMI tracts in any way. It was basically a change to reduce burden to some banks. I wouldn't drop all efforts now

Wanted, many banks (typically small) do not report CD lending. In that world a satisfactory was possible without it, but as an intermediate, I wouldn't give up your efforts to find the deals. While we have no guidelines at this point, my advice, after talking to many examiners would be to think of CD activities like a big bank at this point. Continue to mine your portfolio and find them because you could be in a world of hurt without them.

I think that we'll see many of those non-reporting banks (CD lending) get their arses chewed up in this new intermediate exam in the future. Now you have to have some CD activity, and given the lack of efforts many of these banks have made, it could challenge many of the CRA officers out there who haven't made much effort in reporting.

Also...don't take the FFIEC numbers on CD activity as your judgement on the number of banks who do CD lending. The number submitted with your CRA LR is not a hard and firm numer. Many banks don't bother with a tally until exam time. In my review of exams, the % who do no CD lending is much lower than the % who report no CD lending on their LR. Even in my own case, my CD lending is a ballpark figure. Typically I end up reporting a third to double the figure for the year during an exam after time in the portfolio.

Yep I think we have a worm can here. Dawnie I agree the lack of CD lending is going to be a problem for many. Having done lots of CRA submissions and analysis its been my experience that most institutions are going to have a problem locating CD loans even if they look real hard.


oops got logged out this is Don Narup post

New to compliance and looking for some help.
Bank went from small to large this year. Now we are small-intermediate.
I have read the final doc (as linked at the top of this thread).
Can anyone explain the statemen- page 6, paragraph 3 - What does the reference to HMDA have to do with this change to CRA?

nevermind, i got it now.

does anyone know a definitive answer to the previous question "I am now an intermediate small bank. Do I continue to collect data until 9/1/05 and report that 3/1/06 or can I discontinue collecting data immediately since none of 2005 will be reportable?" We are a $500 million institution and should not have to collect data again for another 4-5 years (based on our anticipated growth level). I will not be collecting until absolutely necessary, but what about 2005 data? Has anyone received any guidance from the Agencies...we are FDIC regulated.

The draft of the joint final rule states: "Because this joint final rule eliminates data collection and reporting burden for banks with assets between $250 million and $1 billion and banks with assets below $250 million that are affiliated with a holding company with bank and thrift assets of $1 billion or above, and will provide greater flexibility in the CRA evaluations of such institutions, the agencies find good cause for the September 1, 2005, effective date." You will not have to report data for 2005 if the joint final rule does not change from its draft version. Therefore, you will not have to continue to collect the data for reporting purposes, but you should wait until the draft is final. It is not likely to change in this regard, but you can't be certain until the final version is released. Having said that, however, I recommend that you continue to collect the data as if you were going to report it because you should have some kind of on-going self-assessment process that would be difficult to maintain if you don't have the data collected. If you don't collect the data you will either have to conduct some sophisticated sampling or surrender your ability to monitor your performance. Do you want to wait for several years between exams to learn how you are performing? How well will you be prepared without your own loan data to respond to potential performance critism from examiners? IMO intermediate banks should not throw their data collection systems overboard. Many LOS's have CRA modules built-in and if you've been using them, it would be wise to continue to do so. At least you won't have to worry about reporting loans incorrectly or not reporting loans you should have. But prudence would suggest you continue your data collection, not for reporting, but for your own CRA self-assessment purposes and to avoid unpleasant surprises at exam time.

Nothing collected in 2005 will be reported by 3/1/06 (by intermediate small banks). However, I agree with Len--before you completely change your procedures, determine how you will know about your own performance.

Find your examiners sampling procedures and use them wisely each quarter. This will take much less time and money than collecting.

I'd be debating on stopping collection if I were within a couple of years from being a large bank. If you are in the position of substiantial growth (ie are you buying actively) and reporting is going well now, continue, but if you're growing normally, I'd factor average growth over the last ten years for instance, and add in the new regs growth formula to see if you really are within a short window of reporting. If you're six or more years out, why spend the bucks? It just isn't prudent banking.