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#707445 - 03/27/07 06:58 PM Question for Large Banks
CRAatBOK Offline

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I have a couple questions for large banks on how they gather revenue information. Do you gather the actual dollar amount or do your loan officers report by revenue code?

How do you indicate in the loan file what revenues you are using for CRA(actually record the number on a loan submission sheet, have a separate form, or other means).

Have you ever been cited by the examiners for not having "written documentation" of the revenues? In other words, if your borrower verbally states his revenue is such and you write it down, would you report it as the CRA revenue?

Any input you can give me would be greatly appreciated.
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#707739 - 03/27/07 10:49 PM Re: Question for Large Banks CRAatBOK
bOaty Offline
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KC, We use the gross revs from the tax returns. I have not had the pleasure of going through an exam yet so your guess is as good as mine on what the examiers would say about a verbal...
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#707742 - 03/27/07 10:52 PM Re: Question for Large Banks bOaty
CRAatBOK Offline

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I guess my question is more of do you or who ever is reporting uses the dollar amount or just the revenue code?
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#707747 - 03/27/07 11:03 PM Re: Question for Large Banks CRAatBOK
bOaty Offline
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The revenue code is all that appears on the loan register, we keep the actual revenue amount on a CRA coversheet with all of the CRA info on it. No one would see the actual revenue unless they cracked the file.

We are actually an ISB but we still collect and analyze the CRA data in anticipation of becoming a large bank someday...

Hope this helps.
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#707748 - 03/27/07 11:05 PM Re: Question for Large Banks bOaty
CRAatBOK Offline

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Are you a National Bank or FDIC?
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#707758 - 03/27/07 11:38 PM Re: Question for Large Banks CRAatBOK
bOaty Offline
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#707873 - 03/28/07 01:46 PM Re: Question for Large Banks bOaty
RR Becca Offline
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out of the frying pan...
We just finished an exam by FRB. I have LOs report loans via spreadsheet, with two revenue columns. One asks for the actual $ amount, or if they don't have a verifiable $ revenue amount they are to put "income" or "unknown." The next column ha the 3 codes for them to choose from based on whatever they entered in the first column. This has cut WAY down on reporting mistake re: revenue amounts, but has also greatly increased our reporting of code 3s. The Fed grumbled about our high percentage of 3s, but all were completely justified so there wasn't much to be done about it.

Not my fault if an LO accepts guarantor income info in lieu of actual business revenue, now is it?
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#707909 - 03/28/07 02:22 PM Re: Question for Large Banks RR Becca
CRAatBOK Offline

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Thanks Becca. Our 3s are increased significantly after this exam because we didn't have written documentation of the revenues. We were using what the borrower told us. Even tho the regulation says we don't have to verify, according to the examiner we do and we can't say we "relied" on something we didn't get in writing.
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#707915 - 03/28/07 02:27 PM Re: Question for Large Banks CRAatBOK
Bullseye Offline
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We have converted from a large bank to an ISB. When we collected, we had written documentation in the file - either tax returns or a written statement. We did NOT have the originator report the code to us, we always checked the file & reported it as a 1, 2 or 3 ourselves.

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#707923 - 03/28/07 02:33 PM Re: Question for Large Banks RR Becca
bubs63 Offline
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Highland Park IL
KC, my banks use a coversheet with the code on it. The revenue source is in the packet. I have been through exams with the FDIC, FRB and OCC with packets setup these way and have had no problems. Internally the problem is making sure the person filling out the coversheet reads the write-up to make sure they know what the revenue source was, and it is in the packet
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#708277 - 03/28/07 08:14 PM Re: Question for Large Banks CRAatBOK
Anonymous
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We use the numbers, and had a special code for "no-income available" - startups,cd or passbok secured, etc.. We found that they indeed were using figures for many startups (prior business revenue if purchasing an existing business, or, in some cases, projected revenue based on solid figures) and had them put that number in.

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#708390 - 03/28/07 11:50 PM Re: Question for Large Banks
CRAatBOK Offline

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Thanks everyone. I am going to have a training for all loan officers and make sure they understand. I think I will pull out some of the examples of things they did wrong and use them in my training.

What is frustrating is that we are doing nothing different that we have done in the past and the examiner is just now saying it isn't acceptable. Based on some internal memo that I never had access to. Grrrrr.
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#708829 - 03/29/07 06:57 PM Re: Question for Large Banks CRAatBOK
Anonymous
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That internal memo wasn't from Chicago, was it?

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#708938 - 03/29/07 08:26 PM Re: Question for Large Banks
CRAatBOK Offline

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I don't know where it was from but we sure didn't have access to it. We are being told that we cannot just collect and provide the examiners with just the revenue codes. We have to have the actual revenues we are using documented somewhere. If the exact dollar amount isn't correct then it is considered an error. It doesn't matter if it is in the correct revenue category.

Funny thing, when I read the reg and Q&A, I see that bank are required to collect and maintain... "an indicator of whether the loan was to a business or farm with gross annual revenues of $1 million or less"....

Oh well. Anyone else having this problem?
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#709024 - 03/29/07 11:16 PM Re: Question for Large Banks CRAatBOK
bubs63 Offline
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Highland Park IL
KC,

Our coversheets do not list the Revenue, just the code. We provide the Financials in the packet to support the code. We have had no problems with the OCC or FED. The previous bank I was at, was under the FDIC, and they had no problems with just the code on the coversheet. You are correct there is nothing in the CRA GIR that stipulates that you need to state actual revenue. Revenue data is not part of your submission either.

I would guess your examiner was having a bad week.
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#709595 - 03/30/07 09:01 PM Re: Question for Large Banks bubs63
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bubs63,
When you say "packet" do you mean loan file? Or is this something different.
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#709686 - 03/31/07 09:13 PM Re: Question for Large Banks CRAatBOK
Kathleen O. Blanchard Offline

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Hi, KC. Is this a loan product where the bank does not get any financials or tax returns from the customer, like a scored small business product?
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#709786 - 04/02/07 02:27 PM Re: Question for Large Banks Kathleen O. Blanchard
bubs63 Offline
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Highland Park IL
Packet as in copying the data out of the loan file that will support the data submitted

Coversheet with the data
Copy o the Note - Loan amount and action date
Copy of the Credit write-up - to prove purpose
Copy of Financials or tax returns - to prove GAR

We do not give the entire loan file to the examiners.
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#709792 - 04/02/07 02:32 PM Re: Question for Large Banks bubs63
CRAatBOK Offline

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Kaybee, In one of the cases it is a loan product. In the other, in our rural branches, it is more of a practice.

Bubs, You do this for every small business loan? where do you keep all the packets? We wouldn't have anywhere to keep them for the three years between exams.
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#709815 - 04/02/07 02:56 PM Re: Question for Large Banks CRAatBOK
bubs63 Offline
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Highland Park IL
How many reportable loans do you do each year?

Yes all the banks I work with are using the packets concept, and have been for a few years. It is more work, and storage could be an issue. But you have control of the data. This will allow you to review the CRA LR (or HMDA LAR) quicker and easier, and you do not have to pull each file to review before the exam hoping that the file is complete. Have you ever found a file that you wish the examiners would have left off the exam request? That is why the packet concept works.

When you responded to an examiners question you will give them the answer and shut up, not volunteering more information than what is needed to answer the question. The packets do the same.
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#709849 - 04/02/07 03:45 PM Re: Question for Large Banks bubs63
Mrs. Rizzo Offline
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I have a data collection sheet that I use which has the loan number, type of loan (SB or SB), dollar amount, purpose, actual dollar amount of revenues and source, physical address where the funds were used...I keep the hard copy and input the required data into CRA Wiz.
We are regulated by the FDIC and though they didn't require it, they liked that I was able to do reports and analysis broken down by revenues (less than $100,000, $100,000 - $250,000 and so forth)
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#709892 - 04/02/07 04:07 PM Re: Question for Large Banks Mrs. Rizzo
RR Becca Offline
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out of the frying pan...
FWIW, I use a similar system to bubs and have now had 2 exams with compliments of "wow, you're so organized!"
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#709895 - 04/02/07 04:11 PM Re: Question for Large Banks RR Becca
bubs63 Offline
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Highland Park IL
A happy examiner is one who leaves the bank ahead of schedule.
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#709897 - 04/02/07 04:14 PM Re: Question for Large Banks bubs63
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Amen to that bubs!!!
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#709898 - 04/02/07 04:14 PM Re: Question for Large Banks bubs63
CRAatBOK Offline

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Bubs and Becca, How many loans are you doing in the exam period? I had 6642 for the last 3 years. That is just small business and farm. I had another 1,615 small biz secured by RRE, which has a dollar volume larger than our SB/SF loans.

Do you do this for HMDA too? Volume there was 6,000 for the 3 years.
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